PIE - Polymer Price Reports

Standard thermoplastics December 2023

Demand struggles with more dampening effects / At best rollovers expected in January, quotations more likely to continue their downward trend

PE: In December 2023, polyethylene prices fell further in the slipstream of the EUR 30/t reduction in the C2 reference. In view of the extremely weak demand, many producers consented very quickly to price cuts that were slightly larger than the monomer reduction. Pressure on demand came not only from the general economic lull, but also from the short production month of December and the efforts made by converters to keep their stocks as low as possible at the end of the year for balance sheet reasons. Apart from that, there were virtually no orders coming from converters that would enable them to reach the volumes agreed for an annual bonus. In any case, these volumes were now unattainable because demand has been at rock bottom for many months. For this reason, buyers are urging their suppliers to abandon the bonus models and, in the future, to lower the selling prices from the very beginning instead of giving potential rebates. Whether this will please producers is another debate. Their recent margin increases had melted anyway in 2023 due to converters’ purchasing restraint; whereas ethylene, for example, was 4.7% cheaper at the end of December 2023 than it was a year ago, the prices of HDPE blow moulding grades fell over the same period by 8.5%, those of HDPE pipe 80 by 9.6% and those of LDPE film grades by as much as 12.7%. With LLDPE (C4) film grades, on the other hand, the price reduction of 4.5% was somewhat less than the fall in the cost of C2 because the low level of imports had kept supply tight from time to time. PE prices are expected to continue their downward trend at the start of the year, even though the C2 reference remained at the previous month’s level. Demand will probably pick up somewhat due to inventory replenishment effects, but will remain weak. This is because many processors are expected to resume production only in the second half of January and there is still a general lack of positive impetus in the economy as a whole.

PP: In view of extremely weak demand and in particular the continued downslide in spot prices, producers barely spoke of the EUR 30/t cost reduction for propylene and just passed it on without further ado at the end of 2023. European production facilities ran far below capacity in December. Nevertheless, the market was sufficiently supplied, thanks in part to the presence of imports. In the first two weeks of the month, converters covered only their immediate needs as they closed up shop until after the Christmas and New Year holidays. Continued weak demand is expected to keep polymer prices under pressure in January 2024, even if the monthly C3 reference contract rolled over. At the beginning of the year, the market is seeing some restocking. This will continue as some converters need to buy, but with the absence of any significant impulse from customer industries, they will order cautiously. The situation is similar in the compouding segment. Some sellers have tossed material onto the market at very low prices to relieve pressure on their own inventories.

PVC: Prices fell further in December. The ethylene contract fell EUR 30/t. Only rarely did producers manage to pass on half the costs, however, since demand was too low in this short production month. “There is no change in sight” was also the case when it came to supply volumes. Although European production plants were only running with a clearly curtailed output, all contracts were still fulfilled. The discussions were focused to a much greater extent on 2024 than on the December price. Against the backdrop of sufficient material being available for the market, ever-fewer converters are willing to commit to long-term contracts, preferring instead to cover their volume requirements to a greater extent on the spot markets. This, together with the continued weak level of demand, will no doubt lead to prices falling further in January too despite the rollover for the ethylene contract. Demand is not expected to recover significantly in the first quarter of 2024. While the market needs calmer waters at last, it also requires reliability. In this latter case, the European Central Bank and politicians are called upon to provide the stimulus urgently needed by the construction industry too.

Styrenics: Styrenics prices declined once more at the end of 2023. Quotations for polystyrene and EPS more or less followed the decline in the styrene reference (down EUR 116/t), although producers did not always pass on the full cost reduction to buyers. The discounts for ABS were smaller because lower reductions in the cost components butadiene (down EUR 10/t) and ACN (down EUR 28/t) slowed down the price erosion. There were hardly any orders. The already-weak demand was further dampened by the short production month of December and the processors’ efforts to keep inventories as low as possible for balancing reasons. Balance-sheet aspects also prompted some processors to request that their orders were not to be delivered before January. Even looking at the year as a whole, demand fell significantly. Processors often reported volume decreases of 12-20%, sometimes even more. The weak demand also affected prices and shrank the producers’ margins. While styrene was 3.9% more affordable in December 2023 than the year before, PS normal was 7.4% cheaper in the same period, EPS insulation white cost 10.9% less, and prices for ABS injection moulding were 8.7% lower. Styrenics prices will probably show little change in January. This is because the styrene reference decreased only marginally by EUR 5/t at the start of the year, and butadiene remained in rollover. Price discussions for styrenics will therefore probably also centre on the rollover or – due to weak demand – slight discounts at best.

PET: The European PET market ended the crisis-plagued year of 2023 in a gloomy mood in December. All sides kept their stocks at the lowest possible level for the year-end closing. The PX reference for November was fixed EUR 45/t lower at the start of December, although this did not have much of an impact on prices. The relatively few regular transactions were settled calmly and unspectacularly with slight reductions. Only in isolated cases did larger individual upward or downward swings result. Customers who were dependent on the Belgian drip and were forced to make other arrangements had to dig deeper into their pockets. A number of suppliers, by contrast, wanted to reduce their inventories quickly and offered greater reductions in order to do so. At the same time, the spot market was more or less inactive. The PX reference, fixed EUR 38/t lower in December, seems to be losing relevance. The matter of linking annual contracts to the precursor is a major sticking point and has led to a situation where the majority of bulk purchasers are embarking on 2024 without a corresponding contract in place. In January, it will no doubt be necessary to continue working with the arrangements of the previous year. This uncertainty is also affecting regular business. Under these circumstances, all those involved are wishing to keep January a calm month. Barring dramatic developments, all parties are therefore expecting rollovers.

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