PIE - Polymer Price Reports

Standard thermoplastics May 2020

Polyethylene witnesses controlled output / Picture dominated by increases in costs of feedstocks / Polymer trends mostly following

PE: How well producers’ efforts to control supply are working is illustrated by their response to the EUR 100/t fall in the cost of C2 at the start of May. They passed on a maximum of half the C2 reduction to the polymer chain. With the film grades, these efforts are meeting with success. Unscheduled outages added to the developments, and European producers’ output was then limited. With C4 film grades, Europe was considered secondary in distribution plans. With C6 grades, imports were plentiful, leading to somewhat larger reductions. Buyers of injection moulding, blow moulding and pipe materials usually managed to obtain bigger price cuts. Orders for standard containers were largely normal, but containers for such products as lubricants were below expectations. Film products for protective packaging for transport and the agricultural sector were slightly below normal, while films for the food and hygiene sectors were stable. Following the turnaround with C2 (up EUR 60/t), price hikes are likely to dominate in June. Some producers’ announcements of hikes of up to EUR 75-100/t are unlikely to go through.

PP: On the back of a fresh decline in the C3 reference, this time by EUR 80/t, Western European PP prices pointed downward in May 2020. Producers sometimes kept part of the cost relief for themselves. For injection moulding grades such as PP homopolymer, however, they were not successful. Demand from the automotive sector in particular was still under the impact of the coronavirus crisis, and supply continued abundant, even if capacity cuts and maintenance turnarounds reduced output. June is unlikely to see an end to the current oversupply, especially as some plants will be emerging from maintenance turnarounds. Notations nevertheless will not continue in the downtrend of the past two months. As the monthly C3 contract turned around and moved up again, PP should be following suit.

PVC: Through the reduction in the cost of ethylene, which proportionately affects PVC, prices came under renewed pressure. The base material became cheaper and, following on from this, the compounds, too. In the latter case, the smaller cost reductions of some of the additive components lowered the size of the price cuts. Producers’ attempts to hang on to part of the reductions disappeared into thin air during the course of the month. In June, prices are expected to turn upwards again following the rise in the C2 reference. Demand picked up again as the coronavirus-related restrictions began to ease but has still not reached its normal level. Producers and compounders are adjusting their output accordingly.

Styrenics: After the SM reference fell EUR 13/t, Western European prices continued to decline in May, although to a much lesser extent than in March and April. As discounts greatly varied in previous months, there were many price cuts at the top of the price range above and beyond the reductions granted on the grounds of the cost decrease to bring outliers back into the fold. For ABS, the price reductions were generally higher due to the latest drop in butadiene prices.
However, the downtrend is likely coming to an end – the SM reference turned upward in June (up EUR 64/t), and styrenics prices will follow this. With a close look at spot market prices, some processors already speculated on the trend reversal, placing additional orders in May. These pre-purchases stimulated demand, which was otherwise still strongly influenced by the coronavirus crisis. Both producers and processors now hope that the gradual relaxation of restrictions will further boost demand.

PET: The Covid-19 crisis shaped the European PET market in May. Demand was below expectations as the turbulence continued, and the stronger demand in the last few weeks seemed more about buying for security than anything else. Producers limited the price cuts for the monthly transactions for small to medium volumes covered here to less than the falls in the feedstock references. Although four-digit notations have largely disappeared from the market, the range of prices is still larger than normal, depending on the trading conditions. Regrind prices are consistently higher than those of virgin material. Around 90% plant utilisation rates were reported from European production. Although imported material was available, business was subdued. Demand from the hygiene segment and thermoforming sheet continued good, but business in the beverage market was disappointing. With feedstocks, there are hopes that prices will bottom out in June. Exploding numbers of Covid-19 cases from consumption heavyweights such as Brazil and India could mean that import prices will become more aggressive. The recent margin increases gained by European producers give them a little more scope to perhaps match the potentially large reduction in import prices.

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