Polyolefin producers face resistance to hikes / PVC stalled by winter slowdown / Styrenics rise with the feedstock / PET prices inch higher on supply hiccups

PE: At the beginning of the month, producers entered price negotiations with confidence. For standard material, price increases in the range of EUR 50/t to EUR 80/t were on the table, and for specialities, the figures were as high as EUR 100/t. In fact, however, only moderate rises were implemented, in most cases oriented to the increase in the cost of the monomer (C2: up EUR 15/t). Although a number of plants were running at reduced rates, there were no supply bottlenecks for any products, and all contracts were fulfilled across the board. In many cases, the order situation was described as significantly better compared with the same month last year. Nevertheless, as stocks of many converters are already well filled, they bought only what was strictly necessary. The European ethylene contract price for March rose by EUR 50/t compared with the previous month, reaching EUR 1,145/t. This is likely to drive up polyethylene prices as well. However, the generally solid supply situation is not expected to change. Demand is also expected to remain at its current level. Processors will likely continue to act cautiously, maintain slightly higher inventories, and purchase material in line with their order books – not least because further price increases are looming for April as a result of the war in Iran.

PP: Producers’ attempts to raise prices significantly above the increased cost of propylene (up EUR 15/t) were unsuccessful. In most cases, the mark-ups were between EUR 10/t and EUR 20/t. Compounders, too, were able to pass on the increased costs of the feedstock. However, demand remained too weak to achieve any improvement in margins. The market for PP homopolymer did not return to a balanced state, even though some lines ran at a reduced speed – some planned, some unplanned. None of the PIE panellists reported significant supply bottlenecks. In terms of demand, certain segments and specific grades showed positive signals – but the key customer, the automotive industry, remained largely inactive. As a result, demand improved for certain processors, albeit from a continued low level. The propylene contract rose again in March, by EUR 35/t. Due to the recent geopolitical escalation in the Middle East, oil and naphtha prices rose significantly. This is likely to set the direction for the contract price in April as well. Producers therefore have enough arguments to adjust their prices noticeably upwards. Imports are also expected to pick up slightly.

PVC: The ethylene contract went up by EUR 15/t in February, driven by the increase in the price of naphtha. The hoped-for seasonal pickup in demand failed to materialise, however. The cold winter pushed down demand to below the planned level. Producers could thus only price in the increased costs in exceptional cases; rollovers were the most frequent result. Converters suffered similarly due to the ice and snow. Although some curtailed their production, they still ended up producing for stock. Ethylene is set to become more expensive again in March and will most likely go up even more than in February. Producers could thus step up the pressure to have the pro-rata costs priced in. Supply is expected to exceed demand, with or without imports from Asia. Many players are confident of a seasonal pickup in demand once milder weather arrives.

Styrenics: Once again, the styrenics markets did not dare to experiment: prices for all materials followed the cost development of the primary products very closely. Polystyrene and EPS largely followed the styrene reference, even if the EUR 120/t increase was not always fully priced in, given the weak demand and ample supply. Cost transfers were also the rule for ABS – in addition to styrene, butadiene (up EUR 30/t) and ACN (up EUR 17/t) were part of the cost mix, of course. Neither suppliers nor processors had much leeway for deviating from this. This situation is unlikely to change in March. The recent increase in the styrene contract (up EUR 73/t) will continue to be the central point of reference for price changes. Again, for ABS, the respective cost increases in March for butadiene (up EUR 55/t) and ACN (up EUR 37/t) are also expected to weigh on pricing. The cost hikes are likely to prompt processors to also increase selling prices. Market observers expect that any growth in demand, fuelled by a possible spring revival, might support this endeavour.

PET: The European PET market in February was still marked by the trend seen in the previous month, with imports again subject to delivery delays. Despite the continuing slump in end-market demand, many buyers were prompted to continue building up stocks due to the uncertainties surrounding the escalating conflict between the US and Iran, plus the highly restrained signals coming from the Chinese market. In many cases, only European goods, in limited quantities, were available for these purchases, which meant that prices for large volumes went up somewhat more than those for small volumes. The February paraxylene contract in Western Europe was settled at EUR 790/t. Once again, pricing was guided almost exclusively by the stronger Asian reference market, resulting in a EUR 10/t increase in the contract price. European production and imports are keeping market supply at a normal level. Slightly more material is required from the polyester chain, and demand from the petrol-blending segment has also increased. However, normal levels have not yet been reached.

More information on PIE Polymer Price services ...