PIE - Polymer Price Reports

Standard thermoplastics April 2020

Large decreases predominate / Producers attempt to limit damage / Mostly equal passing on of falls in feedstock costs / Demand is variable

PE: The polyethylene market in Western Europe presented a varied picture in April, reflecting a situation influenced by customer markets and availability. Demand fluctuated significantly depending on the application. Buyers’ interest was focused on coronavirus-related products, especially for the food, pharmaceuticals and hygiene sectors. Producers attempted to limit to EUR 80/t the share of the latest reduction in the ethylene contract they passed on to their customers, and in individual cases they tried for even more. With some products they also succeeded, but primarily due to the shortage of some grades or to strong demand from certain applications. On average, they factored in around half of the C2 reduction, although converters of HD pipe grades were able to win almost the entire cost reduction due to the oversupply. There were signs of a surplus tendency with some film grades too but not everywhere. Producers with a strong customer presence in the locked-down Southern European countries were left sitting on material, and they tried to dispose of it in Western and Northern European markets. This resulted in a surplus of product in these regions. The price pressure will continue since the ethylene contract was fixed EUR 100/t lower at the beginning of May. Producers’ attempts to limit the share they pass on to customers are being helped by measures to control supply, especially with LLDPE (C8) materials. In May, this strategy could be extended to C4 and C6 grades. The bank holidays in May could put an additional damper on orders. Apart from that, downstream customer industries are still affected by capacity limitations. The re-start of the automotive industry could liven things up a little – for example for blow moulding grades.

PP: On the back of the EUR 175/t crash in the April contract for C3 feedstock, polypropylene prices saw triple-digit declines, even if producers didn’t pass on their entire cost savings. Producers’ attempts to hold their price concessions to EUR 80/t were not crowned with success. Concessions for automotive material as a rule were higher than, for example, packaging-grade polymer, where robust demand supported price levels. Despite outages here and there, supply was sufficiently long, due to the reduced demand amid the coronavirus crisis. With orders from the automotive sector practically dried up, some compounders shut down their lines entirely. When the automotive industry restarts its assembly plants, compounding lines will start up again successively. On the whole, demand for PP will remain weak and the market long. This means that if the propylene contract loses ground again in May, producers will have no choice but to further reduce prices.

PVC: The plunge in the cost of ethylene in Western Europe led to a major drop in the price of PVC. Some producers tried at an early stage to limit the size of the cuts to EUR 50/t, but with the prevailing surplus of product on the market, this proved impossible. The full C2 cost reduction, which amounted to EUR 100/t in April, was not factored in either. For S-PVC (U) and S-PVC (P), the smaller fall in the cost of plasticisers, stabilisers and other additives helped to limit the size of the price reductions. With PVC base, there was sufficient material around despite various plant outages. Only with film grades were there any bottlenecks. Compounding lines are generally running normally now, particularly as the lively activity in the construction industry boosted selling-off initiatives. After the EUR 100/t price decline for C2, further price reductions are expected for PVC in May. However, producers will again try to hang on to some of the decreases since they also need to factor in old stocks that were produced earlier at a higher price.

Styrenics: The rapid decline in styrenics prices in Western Europe continued unabated after the SM reference dropped EUR 315/t in April. Prices for polystyrene and EPS slipped to a 10-year low, and ABS has not been this cheap since 2015. For the most part, producers did not pass on the cost reductions in full, as they first needed to sell off more expensively produced stock materials. However, they granted increasing discounts during the month, so that price agreements widely varied. The PIE price range was significantly widened. Demand was marked by the coronavirus crisis, and plastics producers tried to adjust output to the lower demand. In May, PS and EPS processors are expected to push for further reductions after the SM reference eroded again, even if only by EUR 13/t. It is likely that at least those prices in the high bracket that ended up at the top because of the wide spread in price reductions will be readjusted. As for ABS, the reductions are likely to be more pronounced after the butadiene cost component saw another steep decline by EUR 200/t.

PET: The situation on the European and global PET market continued to be mixed in April. The strong downtrend through the slump in the price of paraxylene in March was partly absorbed by an increase in the demand for PET for disinfectant containers. Whereas orders tied to the price of the raw material inevitably declined because of the lower cost of PX, producers took advantage of the boom in demand to limit the price cuts for all freely negotiated purchases. Notations for the various order models were thus again widely spread. On the supply side, logistics delays were reported. However, the healthy demand allowed stocks to be reduced for the first time in several weeks, with the result that supply is gradually returning to normal. Many disinfectant containers are made of PET. With the exploding demand for this packaging during the Covid-19 pandemic, the need for the corresponding materials rose accordingly. The downward pressure on costs will presumably continue into May. The boom in the demand for bottles for hygiene products and water is unlikely to wane as long as the coronavirus crisis continues. For this reason, it is possible that prices will widen even further, depending on the type of contract. Because recyclate notations have barely fallen so far, the price pressure on secondary food-grade materials is growing. Many sorting facilities have been taken out of operation because of the pandemic. There is thus a threat of increasing problems for recycling plants.

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