11.07.2023
Weak demand causes quotations to fall / A lot of material on the market despite plant cutbacks / Producers and processors have little hope for soon improvement
PE: The price of C2 feedstock fell by EUR 80/t in June. In the case of PE, this prompted triple-digit price reductions across the board. Despite production cutbacks, in the European market, supplies are still available in abundance. This is due solely to the weak demand, however, which has failed to pick up due to reluctance on the part of consumers.An increasing number of European converters are attempting to reduce their contract volumes to a minimum and purchase their material on a spot basis. This is because end users are vigorously demanding price reductions too. The C2 contract has gone down again for July (by EUR 40/t). The start of the vacation season is also likely to weaken demand further. This will put even more pressure on prices in July, August.
PP: The sharp decline of EUR 80/t in the C3 contract had a major impact on June trading in Western Europe. The wide gap to spot volumes and the soft demand created additional downward pressure, with the result that triple-digit rebates were the order of the day. Supply well exceeded demand. As more and more buyers took their orders to the spot market, contract prices started to lose their importance. Prices for compounds saw only double-digit dips, but here as well, producers were unable to improve their margins significantly. For July, additional concessions are shaping up for both PP and compounds, thanks to the EUR 50/t setback in the C3 contract. With the summer holidays cranking up, any efforts to stimulate demand would surely be in vain. Market players are now looking with great interest to August, when a new plant in Poland will pad the already abundant supply.
PVC: The downward trend in PVC prices continued in June. Apart from a brief interruption in February, quotations have now gone down for 13 months in a row. To put this in perspective, prices had risen for almost two years beforehand, which means they are still considerably above the pre-Covid level. In June, it was once again weak demand and the declining cost of C2 that exerted pressure on prices for base PVC. Quotations went down EUR 80/t on average due to abundant supply and competition from low-cost imported goods. This shows once again that prices are no longer worked out on the basis of passing on half the C2 cost. Quotes for compounds also went down. The overall situation is not set to change much in July. C2 fell again and further cost reductions can be expected for plasticisers. titanium dioxide. Further price reductions can be expected for base S-PVC and compounds.
Styrenics: The decline in the styrene reference and continued weak demand in the European market once again depressed prices in June. Most discounts exceeded the cost reduction, some even significantly. The economic environment in Europe remains gloomy. Further declines in July are not out of the question, especially as the onset of the holiday season is not exactly stimulating. As the styrene reference contract dropped again in July (-EUR 87/t), prices for PS, EPS are expected to decline further. Eroding composite costs are likely to lead to new discounts for ABS as well.
PET: In June, even the very last optimists had to bury their expectations of a revival in demand. Despite the hot weather, demand remained weak. Inflation is evidently dampening the consumer mood to an even greater extent than had been expected. At the same time, imports from the Middle and Far East continued to surge onto the market against the backdrop of the global slump in demand. European producers thus cut back their production to the very limit of what was technically feasible. In order to be able to sell even these lower volumes, customers were increasingly offered sliding six-month contracts at favourable conditions for previously unseen small to medium volumes. For regular monthly business, prices generally went down by more of a mid-range two-digit figure. In July, repeat orders could be received from end markets again in isolated cases, but by far the majority have written off the season.
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