Hikes for all grades, sometimes massive / Forces majeures and maintenance further limit availability / With demand at good level, end of the price boom hardly foreseeable
PE: Across all the polyethylene types covered by this report, the rate of price increases in April was only slightly lower than in the previous month. In what is a purely sellers’ market, many converters had to swallow increases of up to EUR 320/t – on average, they amounted to EUR 250/t. Quantity took precedence over cost, and at present prices are not up for negotiation. The maintenance season has since begun, and additional reports of forces majeures from Europe frequently reduced supply even further. On top of that, imports from the US and the Middle East were virtually non-existent. Contracted quantities were mostly subject to allocation and were delivered late. Material for additional projects was simply unavailable. Some converters with a desire to experiment managed to track down volumes in Iran and the Ukraine. As expected, the hard times for converters will last through May. Not until June might substantial imports arrive in Europe. Even before the ethylene contract was fixed, producers were calling for hikes of EUR 200-250/t. Because of the still very tight market situation, it is highly likely that these increases will go through, despite the minimal rise of EUR 5/t in the cost of C2. After all, stocks are empty and there has been little possibility to build them up during the last few turbulent weeks. In some sectors such as agriculture and beverage filling, regular demand is rising. The stockpiling of recent months, on the other hand, has virtually died out. In many cases, the extreme shortages are significantly slowing down the potential growth of converters. One example is the pipe segment, where the pain barrier for prices has been reached and buyers are already postponing orders to autumn.
PP: Gaining even more momentum, polypropylene prices shot through the roof in April 2021, completely decoupled from the cost development for C3 (up EUR 45/t). Driving force was the market’s extreme tightness, which grew even tighter over the month due to plant outages and the absence of import material. Adding to the misery was the strong demand, with panic buying to secure supply exacerbating the situation. On their long journey upward, there is no indication that notations will lose momentum anytime soon. In May, more price increases are to be expected, in particular as supply is likely to deteriorate further and the slight rise of EUR 10/t for C3 is almost incidental. No longer able to pass on the excessive hikes to their customers, some producers decided to either curb production or even shut down the lines.
PVC: It’s the same old story for months: in April 2021 there was also no change in the market environment for PVC. Availability remained extremely tight, with demand running at a good level. Against this backdrop, suppliers took the opportunity to drastically crank up their prices once more. There was not much that those wanting to purchase materials could do. The hikes for PVC thus again far exceeded the pro-rata cost increase for C2 (up EUR 40/t). In May, the picture is still one of extreme undersupply. In the case of compounds, the supply situation for plasticisers at least is showing a gradual improvement again. This will not, however, be curbing the general upward price trend for May even if there are no significant impulses on the C2 side (up EUR 5/t) – on the contrary, prices are still rising for what is now the 12th month in succession. Converters will not, however, be in a mood to celebrate this particular one-year anniversary.
Styrenics: After the massive price hikes in March, which were higher than ever before, April 2021 brought a new round of massive premiums. The price increases for polystyrene and EPS almost completely followed the renewed sharp increase in the styrene reference (up EUR 312/t). Against the backdrop of scarce availabilities, producers needed to make no major concessions, but they also refrained from any margin improvements in view of the latest round of historically high prices. Meanwhile, ABS premiums exceeded the purely arithmetical increase in composite costs (up EUR 222/t). However, producers pointed out that these premiums did not increase their margins either, as they had to buy feedstocks such as styrene or ACN at inflated prices on the spot markets. The generally tight to very tight supply situation prevailing for all styrenics is likely to worsen in May. This is because PS and ABS capacities are down due to maintenance, while EPS is driven by strong demand and by plant cutbacks at some producers who are not backwards integrated. Despite the availability problems, however, the upwards trend is losing steam. The decisive factor is the far too high level of the styrene reference, no longer leaves much leeway. The SM contract went up “only” EUR 87/t in May – as opposed to the decisive triple-digit figure seen in the two previous months.
PET: European notations for PET increased sharply again in April 2021, as expected. The PTA bottlenecks caused by plant problems in Belgium and Poland continued to severely curtail production, while imports were still highly subdued due to the tense logistics situation and the pull of high prices in the US. Prices thus increased noticeably even without taking feedstock costs into account. With demand remaining below expectations, the increases were “only” just into triple digits in most cases. The pandemic lockdowns and the rather cool weather reduced demand considerably, more than had been expected. In most cases, converters were therefore still able to avoid stoppages due to material shortages. It was more the case that poor sales prospects depressed the mood. No substantial change in the precarious production situation is in sight for the next few weeks. The price levels attained could, however, make deliveries from Asia more attractive. If bottle business picks up as temperatures rise in May, further increases will be on the cards. Since the pandemic situation is continuing to have a subduing effect on demand, the hikes will presumably no longer attain the dimensions of previous months.