PIE - Polymer Price Reports

Standard Thermoplastics June 2018

PET goes through the roof / Otherwise weak cost pass-through for all types / Market not in full swing / Strong margin pressure / Classic summertime slump beginning

PE: The price hikes called for by European PE producers soared in June. Against the EUR 63/t increase in the C2 reference, some announced triple-digit hikes, but they were largely unsuccessful. The scales tilted in favour of the buyers, and producers in most cases could factor in at best the increased costs. The depreciation of margins has assumed threatening proportions, and in some cases the pain barrier has been reached. As a result, producers´ attitudes are hardening. In July, they intend to put a stop to margins deteriorating, which means at minimum a rollover as the C2 reference stayed put. Import-prone segments are at present too unattractive to tempt importers. On the other hand, many customer segments are looking solid but not dynamic. There is a lack of stimulus on the market, and stability is expected to be the most probable scenario.

PP: The C3 reference contract for June was fixed substantially higher, but producers were not always able to lift prices for standard PP to the same degree. Distributors were only too happy to charge more for material bought at lower cost. Appealing to buyers unwilling to pay unanticipated increases, they undercut any hike plans producers might harbour. For compounds, the supply side had no difficulty passing on higher costs. On the whole, supply was sufficiently long. For standard grades, demand was weaker, but still within the normal range. Ahead of slackening automotive demand and production, compounds sold well. The rollover of the monomer reference contract should dominate July trading activity in a market shifting into summer mode.

PVC: Europe´s PVC producers were a long way off being able to push through their demands in June. They were not capable of achieving half the pro-rata cost increase resulting from the EUR 63/t hike in the C2 reference contract. Apart from restrained demand, transatlantic imports undermined their endeavours too. Free volumes were offered at such tempting prices that even quality-oriented buyers succumbed to the temptation. Producers had to accept margin losses. Compounds also remained weak. The full cost increase was only priced in for PVC paste grades. Little movement is expected in July, particularly since C2 is trading slightly lower again. A rollover would seem to be likely.

Styrenics: European styrenics suppliers had clearly imagined June would be different. They started with demands for three-digit increases, but customers proved to be highly reluctant buyers. There was talk of a "pre-summer lull” in some segments, but there were no significant production problems. In many instances, the agreed prices did not reach the significantly increased SM cost reference. July's crumbling SM reference has all but counterbalanced the June increase. Many segments are feeling the holiday atmosphere. The warmer the weather, the cooler the economy, it seems. A classic, deep summer slump could be imminent, and styrenics prices are unlikely to reach even the propagated rollover.

PET: The wild ride on the European PET market continued into June 2018. After prolonged calm and oversupply, the PET market is this year experiencing depths of undersupply previously unseen by many players. Everything is going haywire. Extremely tight supply caused prices to skyrocket further, especially on the spot and trading markets, and widened the gap compared with the contract market. As expected, the negotiated contracts have now been affected across-the-board too. The hikes ranged from EUR 100-200/t. The situation was scarcely made better by signs of an improvement in the production situation in Belgium, the commissioning of a new plant in the Baltic region and the prices from the Far East, and which are stagnating. New volumes were swallowed up. Even if some players are expecting prices to level out in July, hikes are still on the cards, with no easing of supply in sight and indications that the beverage season will run well. Only at the start of autumn could things presumably calm down again.

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