Polyolefins and PVC follow precursors downwards / Markets tending to higher liquidity / PS cost hikes below SM / PET sees slight movements / Quiet April market dampens rising costs
PE: European PE types tended weaker in March with the exception of the HDPE pipe 80 and EVA materials. Especially buyers of large quantities were able to win price cuts higher than the fall in costs. The first imports of LLDPE film grades from the US provided for some significant price reductions in this segment.
In April, producers are likely to try to push through the increase in the ethylene reference in full. This venture is unlikely to be very successful in the case of the LDPE and LLDPE film grades, where the markets are showing a tendency to a surplus. With the more seasonally influenced types on the other hand, the speed of the upturn in demand could prove to be the decisive factor.
PP: When the March propylene reference contract was fixed lower, European PP producers dreamed of holding onto their cost advantage and safeguarding their margins. However, their hopes were dashed by their customers' ordering tactics. In the end, most had to concede all of their cost relief to keep sales volume at a halfway normal level. In the compounds market segment the picture was similar, although here the downward price momentum is more likely to have reflected receding demand ahead of the Easter holidays.
As the C3 reference contract for April was fixed EUR 10/t higher, producers hope to be able to price in this slight gain when converters refill inventories after the Easter break. From the current perspective, however, notations are more likely to move sideways. If demand from the end markets does not appear weak, it does not look extremely lively, either. Buyers can order at their leisure. Compounds will move in a similar direction as there is no impetus for any diverging development.
PVC: Europe's PVC producers had to bury any hopes of substantial margin gains in March after two weeks the latest. The exceptional cold spell curtailed demand. At the same time, previous restrictions on production were largely eliminated, allowing stocks to be built up somewhat. The rigid compounds also followed suit, since titanium dioxide remained calm for once. Plasticiser prices rose unexpectedly, however, with compounders experiencing no problems in passing on the cost increases - thanks to a good level of demand. Brisk demand also allowed PVC pastes suppliers to keep their prices stable at a high level and thus, boost margins.
The ethylene reference contract for April has risen slightly, prompting an upward trend. The extra costs, if nothing more, will doubtless be passed on as standard. Margins could also be upped a euro or two depending on the extent of demand, but no major movement is to be expected.
Styrenics: Styrenics prices increased further after the renewed increase in the SM reference contract by EUR 55/t. However, PS suppliers could only transfer the full cost increase at the beginning of the month - later, they had to severely cut back on surcharges in view of an uninterested market. As a result, PIE's price reports were heterogeneous. The cold snap quickly stifled the demand for EPS so that producers were compelled to make price concessions right at the start of the month. ABS suppliers, on the other hand, could for the most part pass on their increased composite costs.
All styrenics were marked by a rather subdued demand. Many processors did not buy more than necessary, as declining SM spot prices inspired them to wait for discounts in April. It now looks as if this will pay off. The SM reference contract for April has decreased by EUR 125/t and styrenics prices are likely to be caught in the maelstrom.
PET: Despite the slight decline in the cost mix, European producers were able to push through moderate price increases for PET. Imports from Asia were almost completely absent, with only quantities produced in Europe on the market. Faltering production in the US following the collapse of M&G diverted many offers to North America. The market thus came dangerously into a state of undersupply. Despite this, sufficient quantities were available overall to meet the demand driven by the first seasonal peak at Easter. The secondary grades, following in the slipstream, also experienced a slight hike midway through the month.
In April, momentum will be pulling in different directions attempting to gain the upper hand. The expectations of a moderate cost increase are set against a somewhat calmer demand. Many consumers also feel that imports reached their lowest ebb in March and thus, more quantities from Asia will soon be available again. No major movement is to be expected, whichever development ultimately predominates.
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