Prices follow slight movements of feedstocks / Producers fail to achieve margin improvements due to weak demand / PVC reacts to multiple outages
PE: Producers were only able to push through the full ethylene cost increase of EUR 21/t for HD pipe grades and EVA in August. For these materials, generally very low stock levels played into their hands. However, there was no way for suppliers to meet their additional goal of increasing margins by calling for hikes of up to EUR 50/t as demand was simply too slack. European buyers of blow moulding materials also had to dig deeper into their pockets due to a general lack of cheap imports. Apart from that, increases reached just about half the additional costs, although in many cases a rollover was agreed. Production stoppages left supplier’s stocks very low. They were nevertheless usually able to deliver goods on time because of equally sluggish demand. Large LD film converters should now consider starting expected discussions on the potential cancellation of end-of-year bonuses instead of waiting until January. It would at least be conceivable to partly offset them with contracts for the coming year. Calls for increases of up to EUR 50/t suggested by many producers for September are based almost exclusively on attempts to improve margins. The pure ethylene cost base remained stable at the beginning of the month, so it is probable that August prices will be carried over, although an autumn revival could provide for minor upward tendencies. The phase of production cutbacks that continued to dominate in August is likely to gradually dissipate in September. The lack of cheaper materials, along with other issues emanating from North America due to numerous forces majeures following Storm Laura, should at least help support prices.
PP: Notations in Europe saw slight gains in August. The increases in the first third, due mainly to plant outages followed the monomer´s EUR 27.50 rise in full, but became noticeably smaller over the course of the month. In the shadow of soft demand, which reflected the twin factors of the coronavirus crisis and the summer holiday season, the outages had little impact on the market. For compounds, the minimal rise in the monomer price in any case was not enough to trigger an index change. For September, PP market players expect no significant change, as the C3 reference rolled over. However, we will have to wait and see whether the hurricane related forces majeures in the US lead to supply bottlenecks in Europe. In any case, the end of the holiday period and the beginning of a new season should have a positive effect on demand.
PVC: The upward trend in PVC prices continued in August 2020. Suppliers priced in the pro-rata increase in the cost of C2 at the very least. They were also able to introduce slightly higher increases for S-PVC base material and pastes due to poor availability. Demand was quite brisk despite the holiday period. Planned and surprise plant outages in PVC and plasticiser production and a further increase in demand for construction products are set to exacerbate an already tight supply situation. Against this background, further hikes are on the cards for September.
Styrenics: The styrene reference’s minimal increase of EUR +4/t in August set the course: European PS and EPS prices hardly moved at all. The price changes for ABS were only slightly more pronounced. For EPS, a rollover was agreed almost without exception, with only one (important) supplier often insisting on small price increases. With regard to PS, the scenery was more colourful: in addition to slight price hikes, there were also some renegotiations that led to downward adjustments. ABS, on the other hand, recorded slight premiums, especially since the other compounds had become somewhat more expensive. In addition, a producer of injection moulding materials was looking to improve margins to benefit from the tight market. Demand for PS and ABS was generally rather slack in August, which was hardly surprising given the combination of the corona crisis and the holiday season. EPS insulating materials fared somewhat better, although a slight dent in construction activity could be observed in many areas. Processors hope this was mainly due to the holiday period and the market will pick up again in autumn. Styrenics in general, however, are not expected to gain much momentum. In view of the slight decline in the SM reference of EUR 13/t in September, most grades are likely to roll over or see minor reductions at best.
PET: No clear impulses emerged for European PET markets in August. Feedstock prices improved only marginally, while everything on the production side in Europe remained stable. Demand continued at a rather subdued level, even though hot weather triggered a slight revival in the beverage sector. Imports from Asia became more attractive in price terms, prompting a number of customers to take a closer look in the region. As a result, European suppliers had to concede a few euros for freely negotiated monthly purchases in order to secure the business, especially in the case of higher notations. Large deals essentially remained stable while spot notations fell slightly due to imports. No clear impetus for change is on the horizon for September. On the supply side, what will happen on the import front remains unclear. As far as demand goes, uncertainty continues due to the pandemic. Notations will most likely stay stable at a low level, with more cheap imports possibly gnawing at prices.