Rollover dominates / ABS and PA 6 weaken / POM slips amid mounting pressure from copolymer imports / PP lifted by higher C3 window / All signs point to rises in April

March proved to be painfully slow for European distributors of engineering thermoplastics in particular. While producers testified to relatively solid direct business with larger customers, medium-sized enterprises supplied by specialist traders were very reluctant in their ordering. On the one hand, this situation was the result of the generally slower economy, but on the other was directly related to buyers' suspicion that material prices were about to fall. That expectation proved wrong, as there were no signs of any significant decline in March. ABS and PA 6 recorded a weak rollover, while natural POM conceded EUR 50/t under the incessant pressure of imported material from the Far East. By contrast, prices for PP compounds actually rose by as much as EUR 40/t, as C3-indexed orders moved to a higher window in the wake of the EUR 55/t rise in March's propylene notation. All other materials covered in this report remained stable.

Despite numerous production cutbacks, supply generally sufficed to meet the sluggish demand. There event were occasional reports of surpluses, including for basic POM grades. Natural ABS was also readily available.

Demand was affected not only by medium-sized buyers' speculative reluctance to order, but also by the wintry chill that effectively put all construction-related activity on ice. Despite the fall in the number of new car registrations and the economic malaise in southern Europe, automotive orders were surprisingly solid - perhaps also an expression of the rising use of plastics in some new model generations.

Producers are planning to exploit this drive to lift prices not only in April, but for the entire second quarter. Benzene-driven PC and PA 6 products especially are suffering from the consistently high cost of this key feedstock. Despite the decline of recent months, benzene prices still hover above the EUR 1,000/t mark, a situation that has yet to be reflected in the corresponding polymer notations. During the course of Q1, producers endeavoured to control their output rates and hope this effort will now yield results. At some time or other, they say, even the most stubborn customers will need to reorder. On the other hand, falling petrochemical prices - propylene down EUR 50/t and benzene down EUR 62/t in April - will not aid their campaign. It remains to be seen whether their customers will consent to even minor price rises.

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