Notations for PE and PVC slightly lower / PP stable / Styrenics follow SM reference down / PET reaches the top / August will be long, quiet sunny month
PE: European PE markets in July were influenced by the EUR 15/t fall in the C2 reference. Buyers wanted to see this cost reduction reflected in their prices, but that did not always happen. In certain niche areas, notations rolled over, but in other areas the price changes ranged from stability to the full cost reduction. Ordering remained mostly solid, and was brisk with any applications connected to beverages. The heat wave ensured above-average activity in this field. August is starting with a continuation of the hot weather. The holiday period in the southern part of the continent will create a significant lull in demand. Many production plants have since switched to summertime operation, and there have also been several forced stoppages due to the hot weather. The C2 reference moved sideways. The outcome this month is then likely to be a rollover.
PP: There was little movement in the European PP market in July, due to a lack of impetus from any side. In view of the tightness, producers rattled sabres a little, but as converters still saw little inclination to order all that much, their suppliers had no choice but to pass through the C3 reference contract rollover on a wide scale. Where prices were already very high, a few buyers won concessions. The compounds market was largely quiet. With southern Europe on holiday and order volume slack, a few price concessions might seem to be in store for August. Even if low, producers' inventory levels are sufficient to meet reduced demand. However, due to the unexpected rise in the C3 reference contract, a rollover could be the most likely scenario.
PVC: European PVC producers have again suffered margin losses on many deals in July. The desire for a constant margin, which would have corresponded to a price reduction of EUR 7.50/t, was more like an exceptional success. In some rare cases, the margin could even be extended through a discount of just EUR 5/t on the price of PVC. However, agreements were mostly EUR 10/t lower. The already weak market - especially in the profiles segment - suffered an additional hit from the summer holidays. There is no indication that the market will change significantly in August. The holiday season continues to limit demand, especially in southern Europe. If there are no unexpected major downtimes, availability should remain good, especially as the maintenance cycles in France are almost complete.
Styrenics: In July, the decrease in the SM reference clearly set the course. Styrenics prices declined across the board. EPS was the only material for which the cost reduction was not transferred in full, as the construction season provided brisk demand. Demand for PS was noticeably reduced by the start of the holiday period, and ABS was marked by the increase in Asian imports. During the peak holiday season in August, this effect is likely to intensify, too. When that happens, styrenics prices should also decline further, at least if the cost base erodes again, as is widely expected. The SM reference contract was not yet available at press time, but after the discount on benzene of EUR 52/t and the ethylene rollover, there is little to prevent a continuation of the downtrend.
PET: The price rise of the last months on the European PET market came to a stop in July, yet spot notations remained at their high level. The monthly contracts for small to medium quantities also remained largely stable, but continued to retain the unusual gap between them and the trading market. Large to very large orders mostly moved sideways, with little stimulus from the main factors governing the costs of precursors. The galloping prices have come to a standstill mainly due to the tendency to an improved market supply. Turbulence in Asia has settled down and the first favourable offers from China fluttered onto the tables. Although material is unlikely to arrive before September, the prospect of this happening brought some relief, particularly as the key facilities for the precursor PTA at Geel / Belgium went back on stream and thus also opened the way to the supply of downstream production lines. On top of that, a new production line has started up in the Baltic region. The prospects for autumn look far healthier. In August, things will presumably remain stable because the additional volumes likely to become available are already much sought after. Added to this is the fact that the heat wave in Europe has led to a sharp rise in the demand for PET bottles, which could ensure stability.
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