PIE - Polymer Price Reports

Standard thermoplastics January 2023

Styrenics move higher / Declines continue for other materials / Delay of PX contract causes turmoil / Turnaround in trend could emerge in February as Chinese demand picks up

PE: In the past few months, PE prices have been falling almost continuously – a trend that also continued into January. Led by the significant fall in the cost of the monomer in C2 contract (down EUR 95/t), PE prices frequently saw reductions in the high, double-digit range. Across the whole PE range, demand actually picked up a little. Some producers succeeded again in factoring in energy costs, but others found themselves in a difficult predicament: because they had cut back their output and were not producing as much as was being ordered, they had no option but to close their order books early. The remaining weeks of Q1 are likely to be interesting. Once the celebrations to mark the Chinese New Year are over, converters in China are likely to ramp up production again. This could thin out the flow of imports that have been coming to Europe from the Middle East.

PP: Polypropylene prices, which have been trending downward since May 2022 (except for a brief pause in November), continued to fall in January 2023. The new decline in the C3 reference contract, which dropped EUR 95/t at the start of the year, set the tone. However, producers often did not pass on the full C3 cost reduction and justified this by pointing to persistently high energy prices. Some suppliers also had to settle for lower discounts because they had already received disproportionately high price reductions in December. Demand remained subdued even after the turn of the year. Stock replenishment effects provided little additional momentum for the market, and the build-up of inventory by processors was lower than usual. Meanwhile, there was slightly more ordering activity from the automotive and food packaging sectors. Price developments for compounds, on the other hand, were inconsistent. While rates for glass fibre-reinforced products also declined, prices for talc-reinforced grades trended upwards for the first time since June 2022 on the sharply higher price of the filler. All other PP prices are also expected to rise in February. The reason for this is not, as one might think, a more pronounced improvement in demand, but merely the increase in the C3 reference (up by EUR 80/t) in the wake of the higher naphtha costs. The foreseeable price hikes will probably have a dampening effect on restocking effects, as many processors are unlikely to buy more than absolutely necessary. Demand remains lukewarm.

PVC: The downward trend in PVC prices continued on into the new year. It was not only the lower C2 quotation for January (down by EUR 95/t) that prompted price reductions. Additional pressure came from weak demand, given the sluggish economic situation and the shorter production month, and from the ready availability of material due to abundant – and still low-priced – imports. The pronounced reductions in the price of base material subsequently exerted pressure on compounds too. The first month of the year was also marked by what at times were tough negotiations to determine the starting price for this year’s contract agreements. After intense discussions, major converters were able to achieve downward adjustments in the triple digits. All players are still acting cautiously on account of the winter recession. Initial momentum is coming from the construction industry, but warehouses are also being slowly replenished in other sectors. It remains to be seen how imports develop in the course of the first quarter. If the flows toward Europe are no longer so strong, prices here could rise again.

Styrenics: Styrenics prices have bottomed out. In January 2023, prices for polystyrene and EPS increased for the first time in six months in the wake of the increased styrene reference contract. For ABS, the rise is the first since April 2022. Although demand improved compared to the extremely weak December, it was still quite subdued, with inventory restocking effects at the start of the year turning out noticeably lower than expected. Given the abundant availability of materials and the great uncertainty in the markets, many processors apparently did not feel a pronounced urge to build larger inventories. They may well have some time to do so. At least in terms of prices, there should be no major moves in February after the styrene contract for the month increased only EUR 10/t. It remains to be seen whether the weak demand will tempt one or the other supplier into offering a new round of special deals. Whether this would help them in any way, considering the significant margin losses of the past months, is another question entirely.

PET: The uncertainty on the European PET market continued on into the first month of 2023. While the reference for the key feedstock PX was finally fixed for December (up EUR 195/t), the contract for January is still up in the air. This is causing considerable turmoil for indexed contracts. Major customers from the film industry in particular are experiencing an upswing in demand, which has to be met without clarity regarding costs. In the meantime, regular monthly business was benefiting from an unexpected surge in imports from China at the start of the month. Although the offerings were somewhat more expensive than previously, they were still considerably below the price level of European goods. Despite their continuing production curtailments, local producers had to bite the bullet again and reduce prices in order to secure sales. Converters took advantage of this situation to fill their warehouses, given that much scope for further reductions is not expected. Most market participants are expecting a rollover or slight increases for February. The price of the imports on offer is rising further, production curtailments are still in place and a start has been made on pre-season restocking. Increases are thus on the horizon for March.

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