Weak demand pushes prices lower again / Automotive remains industry´s problem child / Additional pressure from imports

PE: For both producers and converters, 2024 was a difficult year even though, in the later months, the situation started to ease at least in some respects. As far as prices are concerned, there are still considerable differences compared with those at the beginning of the year. The fact that they have fallen slightly since the summer has not led to any major changes in this respect. Many players regard the gap between contract and spot prices as the main problem. On the one hand, contract agreements are needed in order to ensure reliability of supply and production. On the other, converters want to benefit from the developments on the spot market, even if many materials there (for example for pharmaceutical applications) are not even available. The sluggish demand in the construction and agricultural sectors is a problem for many converters. In the packaging industry, the situation seems to be less difficult. A look at the new year offers minor signs of hope. Some PIE panelists have been saying that a tiny amount of growth might now be attainable again. But for most of the converter industry, life is expected to remain difficult. Anyone who does not have any crisis-resistant customers will have to carry on fighting for orders. Apart from that, companies face the challenge of having to use more recyclate. However, questions of sourcing and economic viability remain for many companies. 

PP: Last year ended as expected – weak. Demand in the fourth quarter of 2024 in particular remained well below the level that had been hoped for and showed no signs of picking up. This caused prices to fall again. And yet, compared to the prices at the beginning of 2024, a number of types have become more expensive over the course of the year. The main cause for concern in terms of sales was, is, and remains, the automotive sector. This market is of existential importance for polypropylene in particular. But it is barely registering any signs of life. On the contrary, shortly before Christmas, one supplier announced that they would have to cut staff at their German plants. The woes of the sector are likely to continue in the new year. Looking at other areas such as packaging, construction, or consumption offer little to no consolation; these segments are running steadily, but also at a poor to very poor level. Imports are proving to be an increasing problem for domestic producers and processors. The material, which is often offered at astonishingly low rates, is putting massive pressure on prices in Europe. At the same time, for reasons of competitiveness, many processors have little choice but to resort to imported goods. Of course, this bears certain risks – if, contrary to expectations, imports fail to materialise (due to the various uncertainties on the logistics market), a shortage of supplies can quickly arise. In the long term, this mixed situation is not healthy for European polypropylene production. 

PVC: The decline in the ethylene contract (down EUR 7.5/t) was priced into PVC quotations. Even though suppliers offered a rollover at the beginning of the month, negotiations resulted in discounts being agreed upon. Supply remained uninterrupted. Due to seasonal effects, order activity fell slightly again. As a result, some companies extended their vacations or opted for plant maintenance. After the ethylene rollover at the start of the year, the market is likely to remain loose. Order activity is expected to remain subdued in January. Processors are therefore unlikely to be in a hurry to build up stocks. The stable prices for ethylene along with the ongoing weak demand are set to push quotations for the compounds slightly lower too. Compounders are likely to align the capacity utilisation of their plants with incoming orders. One topic of conversation – renegotiated quotations will apply from January onwards. The price level has been adjusted downwards again in numerous contracts. A number of processors tried to reduce the number of suppliers in order to increase their negotiation volume per supplier – because the total call-off volume is likely to be at the previous year’s level at best. The disadvantaged producers will endeavour to place their material on the free market. This, in turn, is likely to put pressure on prices in the first quarter of 2025.

Styrenics: Styrenics prices developed in a rather unspectacular way at the end of the year. Following the marginal decline in the styrene reference (down EUR 7/t), prices for PS, EPS, and ABS remained unchanged or went down only slightly in December 2024 – a weak rollover thus characterised the overall landscape. Hardly anything was ordered anyway. Many processors reduced their stocks before the turn of the year for accounting reasons, and therefore bought even less than the reduced volumes needed to feed the short production month. If anything, some players had brought forward their Christmas company holidays in reaction to the sluggish economy. Producers and processors alike seemed to be happy to finally draw a bottom line under 2024. Business had still been relatively tolerable in the first half of the year. But in the second half, things got outright scary as demand dropped significantly. Manufacturers of EPS insulation boards were hit particularly hard by the plight of the construction industry. Following the volume declines of the previous year, industry representatives reported a further drop in sales of 12%-30%. The year 2024 was not a good one for styrenics producers either. Many of them had to accept further cuts in margins despite an already-strained business situation. A comparison of the styrenics price trends against the cost development of the key feedstock styrene illustrates this clearly. While the styrene reference was up by 2.8% in December 2024 against the previous year’s final month, PIE data also show that prices for injection moulding grades of polystyrene only increased by 1.9% and for ABS injection moulding by only 1.4%. Meanwhile, EPS insulation white grades were influenced by the ailing construction industry – the combination of weak demand and oversupply depressed prices by 1.3% year-on-year. At the start of 2025 – the usual time for processors to stock up – styrenics prices are likely to increase again. While the change in the styrene reference was not available at press time, firmer SM spot prices and an increase in the cost of benzene suggest an uptick for the feedstock contract. Prices for PS, EPS, and ABS are likely to largely follow this trend. For the rest of the year, an additional price factor is expected to play a role, at least for ABS – the EU is considering imposing anti-dumping duties on imports from South Korea and Taiwan. Should it introduce such measures, this would be of enormous benefit to European ABS manufacturers and could help restore their emaciated margins.

PET: In December 2024, the dust that had been stirred up by recessionary trends over the past few months finally settled on the European PET market. The stronger USD exchange rate made imports more expensive. At the same time, European production and warehousing seem to have adjusted to the persistently low market demand. Costs remained largely stable; the resulting stalemate mostly resulted in a rollover. Only a few peak quotations for smaller purchases were adjusted slightly downwards. Negotiations on annual purchases are dragging on, as customers are playing it safe. The term “planning security” now only seems like a faint echo from the days gone by. Suppliers are expected to start the year with demands for price hikes. The market balance restored at a low level could be sufficient for marginal increases in January 2025, but probably no more.

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