Prices for polymers plummet in the wake of precursor discounts / Demand remains weak / Imports put additional pressure on prices

PE: Western European PE prices moved in different directions in September. There was, however, a clearly distinguishable trend: producers who had called for extensive increases at the beginning of the month failed to push them through to the extent they had hoped for. Thwarted by the combined force of the EUR 25/t decline for ethylene and weak demand, producers had to make do with significantly lower hikes. Quotations for HDPE grades and EVA even fell. Overall, the supply situation in Europe was somewhat better than in previous months, particularly as some converters worked from stocks they had built up in summer and ordered only what they absolutely needed. In October, demand is unlikely to improve much. Combined with the latest decrease for the C2 reference in the first month of Q4 (down EUR 32.5/t), this means prices are expected to come under pressure in the coming weeks. Meanwhile, the strike by US dockworkers could affect HDPE imports. Overall, however, it appears likely that all contracts from European producers can be met.

PP: The price development in September turned out differently than expected. While initially there were signs of opposing trends from cheaper propylene on the one hand (contract down by EUR 30/t), and rising demand and thinning supply in Europe on the other, many force majeure notices were ultimately cancelled, and demand did not improve as much as hoped. Processors therefore tended to draw from their stocks over the course of the month, which ended up leading to discounts. Talcum and glass fibre reinforced compounds were the exception, as hardly any stocks had been built up for these. Demand is not expected to improve in October, either. Propylene was again fixed at a softer point (down by EUR 35/t) and – with only a few exceptions – plants in Europe are now running again, albeit at a reduced level. Supply therefore exceeds demand, which is expected to put pressure on PP prices. The first providers are already offering special conditions in order to sell large quantities. At the same time, annual negotiations are beginning, in which contracts are likely to become less important. The remaining volumes are being consolidated among fewer suppliers in order to achieve annual bonuses more reliably.

PVC: Despite the fact that the ethylene contract fell by EUR 25/t, the price of PVC base material continued to rise in September. Producers pushed through significant margin improvements despite the satisfactory supply situation for converters on the market. European production is still curtailed. Even after the holiday season came to an end, only a slight pickup in demand was registered, with basic demand still remaining at a low level. Many converters failed to attain their normal production levels again. Negotiations in the fourth quarter are set to be intense. Converters are expected to insist on a pro-rata share of the lower ethylene contract (EUR -32.50/t) being passed on. Given that the construction industry is still struggling, they see little opportunity to pass on the increasing cost of raw materials to their customers. This has also led to an erosion of their margins in recent months. Producers are holding out against this, however, citing the lack of imports due to the punitive tariffs. Their main concern is to improve margins. Negotiations are set to be tough in this tense environment, especially as annual talks for 2025 approach. No sign of a silver lining, which could indicate a rapid upturn in the construction industry, is evident on the horizon. Converters are thus likely to try and formulate their new contracts carefully.

Styrenics: The slight decline in the styrene reference in September (down EUR 8/t) was followed by minimal downward price adjustments for polystyrene, EPS, and ABS – if any at all. Prices often remained unchanged, especially at the beginning of the month, but then discounts of EUR 10/t or EUR 20/t predominated. As a result, agreements in September fluctuated more or less around the cost change. The producers’ emaciated margins did not leave scope for greater discounts, even if the recovery in demand after the holiday season was significantly weaker than hoped for. Additionally, rumours about more significant price reductions in October dampened the processors’ shopping mood. In fact, their gamble paid off – the styrene reference plummeted by EUR 202/t in October. Triple-digit discounts for polystyrene and EPS are therefore likely, even if producers could be trying to bolster their meagre margins by keeping part of the cost reduction. The fall in price for ABS could also be in the triple-digit range, even if the decline in composite costs is mitigated by less pronounced price movements for the other components, butadiene (rollover) and ACN (down EUR 28/t).

PET: The European PET market made an ominously calm impression in September 2024. Given that the end markets were still flat, buyers were particularly reluctant to make purchases while feedstock prices were falling. At the same time, price drops in Asia and North America were accompanied by significantly falling logistics costs on the world’s oceans, generating aggressive import offers. The PX reference plunged by EUR 105/t. Despite this, European producers managed to complete the few transactions that did take place with just moderate price reductions. The quiet month of August could have been the calm before the storm. Since July, the PX reference contract has fallen by EUR 170/t. The reductions so far granted for PET come nowhere close to reflecting this fall. Buyers at all levels are thus waiting for triple-digit concessions to provide them with an incentive to buy. This would not appear unrealistic given the weak end markets and the particularly inexpensive imports.

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