Falling costs drive notations down/ Demand remains below expectations / Prices likely to stabilise and firm in October / PET notations still under pressure
PE: Following the EUR 55/t slide in September's ethylene
contract, European PE suppliers announced cuts of EUR 30/t across the entire
portfolio. Depending on the market situation of each specific type, the
discounts were in the end seldom limited to EUR 30/t, with most processors able
to push for the full EUR 55/t. The fact that demand was relatively sluggish and
below the level normally seen in September further restricted producers' room
Buyers who resorted to wait-and-see tactics in September could end up feeling
slightly disappointed in October. With costs stable and the market trending
tighter, producers could in some cases succeed in pushing through part of their
calls for hikes of up to EUR 30/t. At any rate, the trend is now pointing up
rather than down.
PP: Following the EUR 50/t decline in September's C3
contract, most European PP producers offered rebates of EUR 30/t. One regional
manufacturer flogged off surplus volumes through European distributors, who in
some cases passed on all of the price relief to buyers. All in all, producers
could achieve only slight margin improvements, for the most part for film grade.
Notations for PP compounds slipped by EUR 20-40/t. Indexed contracts also went
down a notch. At distributors, this drove notations further downward.
The rollover in October's propylene contract should keep a lid on any price
movement for compounds. The tightening market for standard grades, at least in
the first half of the month, could lead to slight gains for producers, who are
seeking hikes of around EUR 20/t. Alternatively, the materials could see a
rollover. In the injection moulding segment especially, slackening automotive
demand is exerting downward pressure.
PVC: No matter how much resistance they put up, in the end
European PVC producers were left with no choice but to pass on the proportionate
declines in September's monthly ethylene contract. Following two weak months,
with demand from the construction sector persistently below expectations, many
manufacturers actually found themselves granting more than the cost decline.
This was more or less true for almost all the PVC types covered in this
Following the rollover in October's ethylene contract, PVC prices are likely
to move sideways as well, even if producers have already issued calls for hikes
of EUR 20/t. With demand still poor, it is highly unlikely, however, that they
will manage to push through any increases at all. At the same time, the ongoing
pressure from the caustic soda chain will prompt producers to dig in their
PS: Following the EUR 50/t decline in September's SM
contract, prices for styrenic polymers crumbled on a broad front. While
producers of ABS and EPS were able to pocket a little of their cost relief, PS
producers passed on the full amount to their customers.
As the summer holiday season waned, demand for styrenics picked up. The PS
and EPS insulation markets remained in oversupply, however. The situation is
unlikely to change much in October, with volume sales likely to be frozen at the
September level and after the monthly SM contract was fixed at a rollover.
PET: It took an extremely long time to settle August's
contract notation for key PET feedstock PX. In the end, both the August and
September contracts were fixed almost simultaneously. Whereas the August
notation reflected the imbalance between the two lead contracts, and was fixed
slightly higher, September's contract ended up being settled about EUR 10/t
below that of July. Whether deliberate or not, the uncertain cost situation
meant the decline in PET notations ended up being smaller than initially
expected. With the market trending long, the weakness in the global polyester
chains was reflected by declines of about EUR 20/t. Recyclate prices also showed
first signs of the fall registered in virgin material notations in August.
Prices are likely to continue their descent in October. Together with new
volumes coming on stream in Europe, the oversupplied Asian polyester markets and
the cold weather will serve to dampen demand. Against this background, suppliers
can consider themselves lucky if they manage to keep notations stable.