Prices trend mix in summer month / Major European events disappoint hopes for better demand situation / Polyethylene, styrenics have shot at higher quotations in August

PE: After prices rose considerably in Q1 2024, all was relatively calm from April to June. During this period, converters suffered less from low plant utilisation but more from low selling prices. In July, the market developed in different ways despite the rollover of the ethylene feedstock. In many negotiations, the isolated movement for July saw the factoring in of the sideways movement of the C2 contract. At the same time, spot market prices climbed significantly. Although untypical for the summer, the market can be described as dynamic. The reason for this is the distortions in supply chains, as a result of which far fewer imports are arriving. The fact that many plants in Europe are still running with cutbacks in output is making the situation worse. The C2 contract has already gone up by EUR 20/t. All these factors combined indicate that prices could rise in August. The real absurdity of the situation becomes evident when taking a look at the ethylene reference. Over the past two years or so, the gap between contract and spot market prices has increased to a great extent – this phenomenon cannot be explained with normal macro-economic logic. It is striking that little mention is made of this enormous gap, either in the negotiations with market players or on the PIE price panel. Why everybody sees the white elephant in the room, but nobody wants to talk about it, is something PIE will discuss in a separate report fairly soon. 

PP: Many negotiations were already concluded early in the month. The guideline of the propylene contract – set at a rollover – was adopted. Contracts were fulfilled despite a number of plant outages. Due to the holidays, capacity utilisation was low for many processors. However, advance purchases of materials for the period after the summer holidays kept demand at a stable level. In August, plant outages and unusually low import volumes for the time of year are likely to lead to price premiums above the propylene contract (up by EUR 20/t). Due to the holiday period and the very low demand, it remains to be seen whether providers will be successful in this. Nevertheless, a fundamental change is not to be expected. The peak summer holiday season is setting in and bringing demand almost to a complete standstill. Meanwhile, compounders usually tried to pass along the rollover of the propylene contract. In some cases, however, suppliers did not shy away from small downward price adjustments in order to bring more volume onto the market. This trend is likely to intensify – compounders are expected to try and pass along the rising cost of propylene. This is likely to result in at least a slight price hike. 

PVC: Although the C2 contract for July was fixed at a rollover and demand remained subdued, PVC prices went up slightly in July. This was due to the anti-dumping duties on S-PVC imports from the US and Egypt coming into force. Producers exploited the fact that less low-priced imported material was on offer. Price hikes of up to EUR 50/t were demanded at the peak but the actual rise at the end of the month was significantly lower. Clear differences were seen between standard materials and specialities, with the hikes for “exotic” materials not crumbling quite as much. Despite one plant being closed for maintenance and production running at reduced capacity at numerous European facilities, supply was satisfactory. A brief plant outage had no impact on this – especially since it was rectified by the end of the first third of the month. While a certain number of tonnes made their way to India – which offered an attractive market for boosting sales – sufficient material was left for contracts in Europe. It was thus possible for demand, which remained largely stable, to be fully met. For August, the fact that the ethylene contract has been fixed with an increase of EUR 20/t is expected to prompt discussions. Suppliers will be tempted to pass on at least the increase in costs and may set about trying to improve their margins again. Buyers, by contrast, are likely to push for a rollover, since the effects of the holiday season will no doubt make themselves felt, with demand reaching a very low point. It is thus clear that no major price movements can be expected. 

Styrenics: Triggered by the significant reduction in the styrene reference (down EUR 138/t), styrenics prices also declined across the board in July. Polystyrene even fell for the third month in a row. In a number of negotiations, the level of discounts reached the full transfer of the monomer decrease after the first third of the month. Additional adjustments were made in some cases, so that the average discount sometimes exceeded the monomer reduction. Supply was generally good despite weak to very weak demand. Although European producers are still keeping their production throttled, imports have actually increased supply. The recent outages at Moerdijk impacted the development of the August styrene contract, which was fixed EUR 78/t higher. On 26 July, Shell reported problems with its cracker at the site in question, though it had initially only expected overall minor effects. Shell and its Ellba JV with BASF operate styrene plants at the site, which are also likely to be affected. Both lines together have a production capacity of around 1 mn t/y. Since the news got out, spot prices for the feedstock shot up several hundred euros within three days. Producers are expected to do everything they can to pass on at least a large part of these cost increases. In the weeks to come, the already-low demand is expected to be further dampened by the peak holiday season in Europe; company-wide holidays and maintenance are very common.

PET: The optimistic hopes of numerous participants in the European PET market failed to materialise in July 2024. The end markets showed much greater restraint than expected. The major events for the industry have come to an end and demand has fallen back in line with the reality of an ongoing hesitant consumer mood. Bottlers called off less than they had ordered at times, which meant that converters’ semi-finished-product warehouses remained well stocked. As a result, there was little reason to buy more material. Imports remained rather unattractive as in the past and European production was more than sufficient to meet demand. With PX costs more or less stagnating, moderate increases resulted in the price of PET, which were way below what had been feared. At the moment, the situation does not look set to change much during the summer holiday month of August. Converters have sufficient stocks to meet the rather low level of demand on the end markets. Little movement seems likely on the feedstock side. Significant impetus for price changes is thus lacking – apart from the decrease for the PX contract in July.

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