PE and PVC only weakly rollover / Small dynamics with PP / Styrene pushes its polymers upwards / PET unexpectedly stable due to PX costs / Signs of buoyancy for September
PE: In August, the European PE market presented a sluggish picture. While the food sector including beverages continued to flourish, many other sectors experienced a pronounced summer lull. Although producers had also switched to summer mode, prices came under pressure despite the stable C2 reference. There were a few minor reductions, although most prices showed a weak rollover. In September, demand is expected to pick up. Production is characterised by maintenance turnarounds and general restraint. With costs stable again, producers will try to restore margins. In many areas, it could be enough to see at least a consolidation of prices.
PP: The European PP market saw little movement. While the C3 reference contract rose slightly, producers' plans to lift prices fizzled as buyers remained in a holiday mood. Lower output met with lower demand as the summer lull made a comeback. The result was that PP notations remained flat at the July level. In September, moderate increases may be on the horizon. The C3 reference contract was fixed EUR 10/t higher against July, bringing the two-month rise to nearly EUR 20/t. If demand in September follows in its typical pattern, demand should liven up soon. As producers' inventories are not exactly full, and cracker maintenance turnarounds are gearing up, C3 could trend tighter.
PVC: For another month running, Europe´s PVC producers had to accept margin losses on a large number of contracts. Demand was weak, particularly in southern European countries. At the same time, material was available in abundance. As in July, producers were demanding a rollover at the start of August. However, the tendency toward oversupply in the market ultimately led to price reductions, especially in the upper price segment. With the C2 market having set the example of a rollover and the expected seasonal pickup in demand, producers will doubtless be hoping that they can make good their margins again.
Styrenics: In Europe, styrenics prices reacted in different ways to the slight increase in the SM reference. With PS, suppliers generally transferred the full cost increase, while with EPS, they usually had to contend with lower hikes. Due to more competition from Asia, ABS prices mostly remained at July's level, only natural ABS saw slight rises. Delivery often caused headaches. There were some delays since not enough truck drivers were available during the holidays. The holiday season governed demand for styrenics too, even though it turned out quite well for PS and ABS in August. Demand for EPS varied greatly from region to region, in some cases with major fluctuations in day-to-day business. Demand should pick up in September. However, more price hikes are expected after the increase of the SM reference.
PET: At the start of August 2018, everything was clearly pointing to the pressure being taken off European PET prices after improvements emerged in the undersupply situation. In the end, only a few buyers obtained moderate reductions during a short period around the end of July. By a third of the way through the month, suppliers were refusing to give up ground. The EUR 60/t increase in the PX reference as well as the bad news of exploding PX prices in China caused the first import offers to disappear. Hence, producers maintained their July prices on into August. Supplies have returned to normal, and demand should return to the customary level after the hot European summer. For PX, triple-digit hikes are feared to be on the cards. This will have an impact on suppliers´ demands for PET, since it could mean a rise of almost EUR 200/t in the cost mix since July. Despite the already high level, increases are expected.