Most prices rise above monomer markups / Imports improve supply, make the market long / Demand remains low for all grades

PE: The EUR 30/t rise of the C2 contract in March led to most prices rising by significantly more than the monomer. The month presented a picture of two halves – in the first half, producers dominated the scene and were mostly able to push through the price increases they wanted. The further March progressed, however, the more the pendulum swung to the side of the converters with the result that, towards the end of the month, the remaining agreements did no more than pass on the extra costs. For April, an increasing volume of imports is expected to arrive in Europe. This may well lead to a situation in which converters can benefit from additional sources of supply. For this reason, the price increases are likely to decline to merely passing on the EUR 40/t rise of the cost of the monomer. It would then be right to say that the price rally that began in February would probably have come to an end.

PP: That the propylene contract closed at a plus of 35 EUR/t was an initial indication of further price increases for the polymer. In view of the tight supply situation, agreements in the first half of the month were often concluded with additional margin shares. However, the demands of producers for triple-digit price increases could not be accommodated on the market. The supply situation is expected to improve in the coming weeks, thanks to imports from Asia. Demand, however, is likely to remain at the previous month’s level. There even appears to be a slight decline in film types, as some companies are starting April late or with reduced production due to the Easter holidays. Nevertheless, compounders are expected to do everything in their power to stop the gradual erosion of their margins. The increase of the propylene reference price for April by EUR 45/t is the third uptick in a row. As the market is likely to return to a clearly balanced situation, the contract could also serve as a guideline for polymer prices in most cases.

PVC: Once again, it was the feedstock that set the direction. The EUR 30/t increase in the ethylene contract formed the basis for a large number of transactions, and negotiations concluded with producers and converters agreeing on a pro-rata share of the costs being passed on. The demands voiced at the start of the month – for significantly higher increases of up to EUR 70/t – proved impossible to achieve on the market. Even though demand from the construction sector in particular picked up slightly, call-offs were still below the customary level for the time of year. One exception in Europe was the Polish market where a special economic situation is emerging – triggered by additional EU subsidies for housing construction. Building interest rates, which have almost halved in Poland compared with the previous year, are also an incentive to invest. Apart from the development of the ethylene contract, there are unlikely to be any arguments for pushing through major hikes in April. With a sufficient supply situation on the market, increases, if any, should be in the range of the pro-rata C2 costs. Prices should therefore firm.

Styrenics: In March, the cost of styrene skyrocketed once more – the reference contract shot up by EUR 222/t – fuelling another price hike for polystyrene, EPS, and ABS. In the case of polystyrene, the price hikes often reached the full extent of the monomer price increase or were only just below it, while the premiums on EPS were only slightly lower. ABS prices also increased sharply, as suppliers usually demanded a full transfer of the composite costs, which had risen by around EUR 150/t. In some cases, and particularly for extrusion materials, they even added a slight margin component. The already-weak demand was further dampened by the hefty price increases. Processors are trying to ride out the current bull market and are ordering only essential volumes. However, they will probably have to weather the situation for April – the SM reference has increased again at the start of Q2, even if “only” by EUR 44/t. Processors are now hoping for a trend reversal in May.

PET: The European PET market went through two distinct phases in March 2024. Early transactions were fixed at a rollover in most cases. When it became apparent that many of the announced imports had been held up by the ongoing, tense situation off the Horn of Africa, European producers hiked their demands sharply, citing increased feedstock costs. Although the PX contract remained well below expectations, increasing by only EUR 5/t, producers did manage to push through average increases of EUR 30/t to 40/t. However, business remained at a rather low level in terms of volume. The slump in demand from the application markets continued, and hence, converters were able to restrict their granule purchases to what was absolutely necessary. Producers intend to increase prices further in April. In view of the import volumes that have now been announced for the start of the month, however, and the fact that demand is still at a weak level, a rollover seems likely, with slight increases at most. Given the poor consumer mood, the outlook for spring looks rather shaky.

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