Hardly any movement worth mentioning in December / Bonus purchases partially stabilise demand / Stability expected in January at first glance
PE: Polyethylene producers tried in vain in December to factor in the small EUR 10/t rise in the C2 reference. Supply was simply too good for them to be successful, and with the LDPE and LLDPE film grades they even had to grant minor concessions. At the end of it all, attempts to pass on the cost increase succeeded only with higher-specified HDPE injection moulding grades. Demand was characterised by the shorter production month of December. Converters occasionally placed extra orders to obtain their bonuses, but otherwise most did what they could to ensure that stocks remained low at the end of the year. Major price movements are not expected in January, particularly as the C2 reference contract stayed as it was. Some producers are keen to raise PE prices in view of reduced margins, but it remains to be seen how much of an increase, if any, they can push though. They are most likely to succeed with HDPE.
PP: The small 5% rise in the December C3 reference was quickly brushed aside as prices proceeded to roll over, whereby the deteriorating spot notations played a role. With plants running uninterruptedly, there was sufficient product in the market. Demand was supported by buyers looking to reach certain bonus levels. Some producers are predicting a decline in demand in January, and thus receding prices, especially as a number of converters restocked in December. Buyers with contracts will be unable to avoid paying the expected minor increases. As the January C3 reference rolled over, compounders with contracts indexed to C3 will not face hikes as had been feared. Reflecting the sluggish automotive economy, order activity will likely be below average. Seasonal material for spring production lines could see stronger demand.
PVC: Higher costs for C2 in December were not priced in everywhere in the customary manner. While at the start of the month it looked as if this would happen, virtually no costs were passed on in the course of the month. Producers also refused to grant the discounts that some processors were demanding. Since the price of the additive components also remained predominantly unchanged, there was little movement with compounds. The price reduction for plasticisers was the sole impulse in December, but this had no impact on flexible PVC. Production was adapted to the reduced level of demand. The C2 reference contract for January 2020 remained at last month’s level, with PVC prices likely to be mostly unchanged. While some production lines will be starting up at the beginning of the month already, this will be for the customary stocking up on finished and semi-finished goods.
Styrenics: Western European styrenics prices in December 2019 followed the EUR 47/t decline of the SM reference. In order to reduce inventories, suppliers granted price reductions above the cost decreases, especially for larger volume purchases of white EPS and ABS. Prices for all styrenics reached their respective lows for 2019. All materials were readily available, and there was still oversupply at times. Demand was characterised by the short production month of December – many companies stopped production before Christmas and will not restart plants before the second week of January. Those processors that keep inventories low at the end of the year did not order more than necessary. For the others, the low-price level offered a good buying opportunity. There should be an uptrend again this month since the SM reference for January 2020 rose by EUR 64/t. With the increased costs, styrenics prices should climb.
PET: Western European PET notations evidently bottomed out in December 2019. Freely traded and large volumes remained at the level of just above EUR 800/t, and deliveries linked to PX also resulted in a rollover. For the medium to small volumes subject to regular monthly transactions that PIE reports on, prices at the lower end of the range slid by about EUR 50/t, and those at the upper end of the range remained mostly stable. The new IMO provisions for global shipping coming into force in January 2020 are already making themselves felt. The upcoming switch to low-sulphur fuels will push up freight costs by about EUR 30/t. In the meantime, changes have evidently occurred in the market structure. Instead of the usual EUR 100-150/t to date, the range between the lowest and highest prices is now likely to be EUR 250/t or more. Prices of food-grade rPET have been higher than those for primary PET grades for a good year. While no major momentum is in sight to boost demand for 2020, and warehouses will remain well-filled, slight price changes may come about. The start of the year is set to be quiet.