Weak demand still dominates markets / Producers’ demands for the most part fizzle out with no effect / Impact of coronavirus outbreak could be seen in February
PE: In January, only very few of the PE grades covered by this report experienced any price change, and if they did, the change was small. The hikes of up to EUR 50/t that producers announced mostly went up in smoke, particularly as numerous production plants were operating at reduced output due to weak demand. There is a growing discrepancy between integrated producers and producers who have to buy in C2. With C2 rolling over, there were only occasional price increases for the more specified grades. The C2 reference contract was settled at a rollover at the start of February. Not only with the feedstock but also downstream there is a tendency towards a surplus now that Chinese industry is being slowed down by the coronavirus outbreak. For most PE materials, the price curve will likely point downwards. Many more higher-specified grades in the injection moulding, blow moulding and pipe segments could remain stable, however.
PP: The PP market saw little momentum at the start of 2020, despite a few producers’ attempts to push through increases. This was unusual as many converters replenished inventories despite having stocked up in December. In freely negotiated transactions, notations for compounds fell slightly, due to overcapacity in the market. Demand was strong for the most part. Due to pressure on selling prices, producers will try to pull notations up a notch in February, despite the stable monomer notation. Price pressure continued in January, which means that producers will attempt to achieve hikes in February. Although healthy order volume could lend some support, it seems rather unlikely that they will succeed. Where price levels are low, there is a chance of an upswing. Specified grades of PP copo could see relatively more price dynamic, as fewer alternatives are available. Converters are gearing up for seasonal demand. Order volume should be higher in February, though not exactly robust. The automotive market will prevent that.
PVC: Despite the C2 reference contract being settled with no change, European PVC market leader Inovyn confronted customers in January with demands to improve its margins – initially to no effect. Contrary to expectations, demand ran at a good level, with sales of window profiles faring well. With compounds, slight price reductions for titanium dioxide (PVC-U) and plasticisers (PVC) prompted a minimal downward movement. For February, there are price hike announcements. Producers want to put a stop to what they see as the continuing erosion of prices and margins. A close look at the facts, however, shows that this will not be feasible, or not in the initial weeks of February at least, especially since C2 has remained stable. The plan is most likely to prove successful for the PVC paste grades. With demand, February is set to be dominated by the build-up of stocks of finished goods.
Styrenics: In January, styrenics prices began to increase again, ending the downtrend of the previous three months. The new direction of the prices was largely provoked by the higher SM reference contract. After margins had eroded for several months, producers aimed to at least transfer the cost increase. For PS and ABS, this was largely successful. The hikes on EPS did not always reach the full amount of the SM cost increase. Demand was satisfying on a broad front. Inventory restocking after the turn of the year brought a boost. The EUR 50/t increase in the SM reference in February and resulting price hikes on styrenics could have a dampening effect, however. If processors were to speculate on declining SM prices in March, many of them would now not buy more PS, EPS and ABS than necessary – and spot prices are giving some first indications at a possible SM decline next month.
PET: In January, the bottoming out of Western European PET prices seen in December 2019 was confirmed. Prices remained at the levels attained or underwent marginal increases. Slight hikes resulted for smaller and specified volumes in the regular monthly transactions, generally as a consequence of the short-term oil price rises. The upward pressure eased in the second half of the month. The gap between the notations for the different trading models and primary goods and recyclate remained in place, as did the good market supply. Imports continued to displace European goods. However, the newly adjusted prices for 2020 mean that the offers are no longer as attractive as before. Little has changed regarding the oversupply, since demand is disappointing. The January costs for PX and MEG were not fixed at press time, but little momentum is expected. In the global petrochemical markets, prices remain under pressure. Demand should remain weak and supply abundant. Market players are hoping that March is the first month of spring.