PIE - Polymer Price Reports

Standard Thermoplastics February 2018

Costs passed on for PE and PVC / PP producers up their margins / Styrenics in tandem with sharp rise in monomers / Polyolefins under price pressure in March

PE: With the exception of EVA, the rise in the C2 reference price was in most cases factored in on the European PE market in February. Above all, buyers at the lower end of the price scale had to pay the cost increase in full. Due to healthy stock levels and in view of the high prices, however, customers called up only as much material as was necessary. As before, supply on the LDPE market was better than with LLDPE and HDPE. Most producers are not showing any signs of passing on the cost decrease from the lower C2 reference in March. Converters´ desire for price reductions should be put in perspective particularly with the materials that are subject to seasonal demand. The hope for lower prices will also be dampened by the upcoming maintenance turnarounds at European cracker facilities. A slight downward tendency is probable.

PP: As was expected, PP price increases, especially at the lower end of the scale, significantly exceeded the rise in the C3 contract in February. Producers seeking hikes received support from outages at important plants. Price support for PP compounds was fuelled by the inadequate supply situation for polyamide. Producers were at minimum able to pass on their higher production cost. Even if suppliers could not fully recoup their higher costs for C3 over the past several months, there is little scope for additional hikes at the moment, since the reference contract for March fell by EUR 23/t. Despite short supply, producers are unsure how much higher notations can go without meeting resistance. Aa sideways movement is the most likely scenario for March.

PVC: The price hikes announced by European PVC producers in February were too high, as it turned out. Base polymer suppliers were able to pass on not only the pro-rata C2 costs, but also occasionally won minor margin improvements. With compounds, the rigid PVC grades rose once again at an above-average rate. Titanium dioxide continues to be a problem. Flexible compounds suppliers basically passed on the matrix costs. PVC paste grades benefited from the very lively demand. In March, the upward tendency will continue. Irrespective of the cost development, producers will try to factor in margin improvements. They could succeed in many cases, but to a moderate extent.

Styrenics: After the EUR 130/t hike of the SM reference contract, styrenics notations increased sharply in February. There were three-digit premiums on PS and EPS. ABS prices were limited by relatively lower cost increases for butadiene and ACN. The premiums on PS and ABS almost paralleled the cost hikes, while EPS prices generally increased to a lesser extent to account for an already high pricing level and seasonally reduced demand. Often processors only bought essential volumes in the hopes of a future price downtrend. EPS processors, however, were likely to buy more. Many of them still remember last year's bottlenecks too well. As the SM reference contract rose in March, by EUR 55/t, market players are expecting further price hikes. All styrenics notations will merely use the current high pricing level to soar even further. With EPS insulation materials, March could even set new record prices.

PET: In February 2018, what was more of a latent tightening trend on the market led to slight increases for PET in Europe again. Primarily smaller quantities were affected. The rises are also coupled to the increases in the US, where prices rose more sharply, since M&G Polymers´ insolvency meant lesser quantities on the market. The higher prices also attracted more export volumes from other regions, which were then lacking for an across-the-board supply in Europe. In Asia, prices also experienced a moderate rise again as a result. February already saw a relatively brisk level of demand. This is set to rise further in March. The global upswing in the polyester and petrochemical chains is creating a situation where higher increases are possible. Buyers are also becoming more nervous, which could trigger a run.

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