Monomer, polymer go hand in hand – down... / Persistent slump in demand, more imports put pressure on producers / Tough negotiations expected until end of year

PE: Polyethylene prices came under further pressure, with the EUR 32.5/t decline in the ethylene contract adding to the ongoing weak demand situation. As a result, there were a number of special deals in which reductions were agreed well below the fall in the monomer cost. As before, production plants in Europe were operating with cutbacks in output. Contracts were, however, fulfilled without exception – particularly because the arrival of imports boosted supply. Ordering activity remained at a low level, but was always regarded as stable. In November, the market is likely to develop in two directions. The basis will come from the rise in the cost of the monomer: ethylene changed direction and rose EUR 30/t. One producer subsequently tried from mid-October to hike prices by EUR 50/t. At the same time, another producer offered customers reductions for November. The market seems to be trending long because of both imports and the high stocks held by some suppliers. For this reason, quotations are expected to remain stable – unless, that is, they fall as a result of special deals. The year is coming to an end, and some converters will already have put plans in place to cut down their stocks before Christmas for balance-sheet reasons.

PP: The propylene contract price fell by EUR 35/t. As demand remained weak and inexpensive imported materials also came ashore, this put pressure on polymer prices. In many cases, they fell much more sharply than for the precursor – by up to EUR 70/t at the peak. The end of maintenance season and the fact that there was no increase in orders despite the post-holiday period meant that suppliers’ stocks filled up. The market was also enriched by imports from the US, the Middle East, and Asia. All in all, the market was oversupplied. Processors were reluctant to place orders as they were living hand to mouth. Although volumes from the consumer sector reached a robust level, the slump in the automotive industry caused problems for a number of companies. The propylene contract for November was fixed at a markup of 25 EUR/t. Providers will try to pass on at least some of the increased costs. Nevertheless, prices for polypropylene are likely to remain stable. Weak demand and the tendency to reduce inventories will likely limit orders. There are also still inexpensive alternatives. Material is abundantly available on the market. Not much momentum is expected in the last full production month of the year. For the most part, processors are likely to concentrate on reducing their stocks and only order what is absolutely necessary.

PVC: Despite the fall of EUR 32.50/t in the C2 contract, PVC prices moved sideways in October. Minor downward adjustments (by EUR 5/t) were seen in isolated cases. The absolute exceptions were deals concluded at the start of the month with increases of up to EUR 10/t and agreements that still incorporated a catchup for September, with reductions of up to EUR 10/t. Even at its curtailed level, European production was sufficient to permit contracts to be met. Demand continued weak and the construction sector is no longer expected to generate major momentum this year. Call-offs from the pharmaceutical segment, which has been faring considerably better to date, also declined – delivery times have now been reduced drastically. Looking ahead to November, another month of little movement is to be expected. The development in the C2 contract (up EUR 30/t) is set to play no more than a subordinate role. Many producers are reporting that they still cannot produce profitably and are pushing for an improvement in margins. The ongoing lull in demand coupled with a generally low willingness to place orders before the end of the year will no doubt lead to tough negotiations once again. When it comes to supply, sufficient material should still be available, even if the two upstream plant outages are impairing PVC production. One plant in the UK is undergoing maintenance, which will primarily impose limits on the regional availability of S-PVC and E-PVC. One producer has also declared force majeure for a plant in Tessenderlo, Belgium. The VCM produced there is used as feedstock for three PVC plants.

Styrenics: In October 2024, the mood on the styrenics market fit the autumn weather – gloomy. Almost all market players attending the Fakuma trade fair in Friedrichshafen, Germany, were in an equally subdued mood. In addition to often disastrous demand and adverse market conditions, they complained about the lack of positive stimuli or even signs that such impulses might appear in the near future. Prices for styrenics developed accordingly. When the styrene reference fell sharply in October (down EUR 202/t), this heralded significant discounts for polystyrene, EPS, and ABS. Many producers attempted to retain part of the cost reduction to restore their margins, but meagre demand thwarted their plans. Over the course of the month, the discounts for all materials reached the full extent of the monomer decline or were only slightly lower. The only reason price cuts did not go beyond this is probably because the exhausted margins of producers no longer left any room for manoeuvring. In November, quotations are expected to remain largely unchanged, since the styrene reference contract was fixed only minimally higher, by EUR 5/t. With the other composite costs also seeing no major developments (butadiene unchanged, ACN up EUR 41/t), ABS is set to witness a similar development.

PET: The European PET market made a rather disastrous impression in October 2024. Customers were able to continue with their restraint in the light of adequately filled raw material warehouses and plummeting PET prices. More than enough material was thus available from European production. Producers were forced to lower their offer prices considerably in order to sell anything at all. Their endeavours to keep disruptive imports at bay were evident. In the end, triple-digit price cuts were the order of the day. Despite this, only small volumes were purchased. This misery is set to continue in the weeks to come. In many cases, negotiations on the annual contracts for major purchasers, which are usually concluded in October, have not even started. Those making smaller purchases are also sensing further reductions given the ongoing global lull. The producers, in contrast, need to secure sales volumes despite all the cutbacks and temporary shutdowns. Overall, significant price reductions can be expected again, irrespective of the PX contract, which was fixed at a plus of EUR 40/t for October.

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