Widespread rollovers for PE, PP / PET prices move higher around end of month / War in Ukraine rattles customers / Conflict undercuts orders for March
PE: The generally sluggish demand in February thwarted PE producers’ plans to hike their prices following the rise of EUR 67.50/t in ethylene reference. But that was not all: due to the particularly poor demand with LDPE, LLDPE and some HDPE types, they even had to grant price cuts. It should nevertheless be said at this point that, for some time now, prices have been at a very, very high level. The picture is now additionally being affected by the implications of the war in Ukraine. Many converters and their customers are experiencing great uncertainty and putting their foot on the brake when it comes to ordering. The still-high price structure and the probable continuation of the subdued ordering activity is likely to lead to a situation in March in which producers can only factor in part of the latest C2 cost increase of EUR 95/t – and, with HDPE blow moulding and blown film grades, may possibly not even succeed with that, in view of the surpluses. EVA remains entirely unaffected by developments with PE. In view of the massive shortage on the European market, the material continued to soar unchecked.
PP: Prices for most homopolymer grades covered in this report rolled over or were at least close to a rollover. Copolymer grades occasionally saw substantial rebates, while light coloured talc-filled compounds were pulled slightly higher. The automotive industry, which was the main driver of demand, was unable to work off the large order backlog. On the whole, demand was flatter than a pancake. Injection moulders only covered their immediate needs or grasped for special offers to fill inventories – not least in anticipation of an improving economy. In the last few days of February, the war in Ukraine created uncertainty. The performance of the consumer packaging sector was disappointing. Order volume fell much faster and more steeply than expected. Film manufacturers could also find ample spot material and didn’t need to call up contracted volumes. Supply of homopolymer from European sources was more than adequate, despite several plant outages. Imports from the US and South Korea were plentiful and could be had at competitive prices. Here, prices for small and medium-sized orders were often below the PIE range. The EUR 95/t rise in the March C3 contract will not have much of an effect. Converters’ order books are remarkably thin for this time of the year. One of the reasons is uncertainty over the war in Ukraine. This is especially worrying as large automotive OEMs, particularly in the utility vehicle segment, are exiting Russian joint ventures. European producers are being doubly hit. Cheap imports are robbing them of any chance to push through hikes.
PVC: Prices are spiralling again. Quotations for PVC compounds continued their upward trend in February 2022; the price of PVC base material was also poised to go up again, following a two-month breather. In the case of base material, the increase was driven primarily by the rise in price of C2 (up EUR 67.50/t). For compounds, however, it was the more expensive base material and price hikes for additives such as titanium dioxide, stabilisers, and flame retardants that had an impact. This situation is not set to end any time soon. The war in Ukraine has already triggered price increases for oil and energy, and March quotations for PVC and compounds are likely to be following suit.
Styrenics: In February 2022, prices for styrenics were still largely unaffected by the uncertainties arising from the war in Ukraine. Following the decline in the styrene reference (down EUR 51/t), prices for polystyrene and EPS also declined. In the case of polystyrene, some suppliers went beyond the SM cost reduction because they also took declining energy costs into account when setting prices. The reductions for EPS grey, however, were significantly smaller in view of the shortage of materials. Several suppliers also granted price reductions on ABS, even though composite costs barely changed – some players justified the reductions with lower energy costs, while others particularly brought previous peak prices back into the fold. Alas, the phase where prices eased somewhat after ABS and EPS had previously marked new all-time highs lasted only briefly. Russia’s invasion of Ukraine and the subsequent sanctions imposed by the West are unsettling the markets. This leads to increasing feedstock and energy prices. Styrene reference increased by EUR 93/t in March, and in the slipstream of this, PS and EPS will also become more expensive. Premiums are also foreseeable for ABS, especially since the costs for butadiene (up EUR 100/t) and ACN (up EUR 93.50/t) also went up in addition to styrene. Depending on the supplier, an energy component is also likely to be added. The bottom line is that new record prices for EPS and ABS are on the horizon. Additionally, logistics will be another source of grief for processors, as many truck drivers working across Europe come from Ukraine, and have returned to their homeland because of the war.
PET: European PET markets became increasingly nervous in February 2022. The start of the month saw the arrival of imports from the Far East as announced, so initial reports of a PTA shortage in Lithuania failed to make much of an impact. Towards the middle of the month, however, Asian FOB prices increased significantly, the production situation in Europe tightened, and oil and energy became more expensive. At the same time, pressure mounted on hesitant customers to make pre-season purchases, and warehouses were emptying. However, by then most purchases had already concluded with rollovers. Small volumes for ad-hoc consumption subsequently became more expensive, with prices going up by as much as EUR 50/t. The outlook for March is one of great uncertainty. The war in Ukraine is overshadowing the markets. Whether oil, gas, energy, or logistics, virtually everything is poised to become much more expensive. Further delivery delays are also possible in this situation. Upheavals in trade flows could dampen imports from Asia and make them generally more expensive, while any escalation of tensions in Central and Eastern Europe could impact the production situation in Lithuania. In short, little can be ruled out. At the same time, the spring season is getting off to a start, and with it comes demand for beverages, which continues unquenched even in times of crisis. All in all, significantly high price increases are doubtless on the agenda.