PIE - Polymer Price Reports

Standard thermoplastics February 2020

Coronavirus dampens existing buyers´ reluctance / First calls for increases arose towards end of February / Focus will be on improving margins in March

PE: Depending on the product, producers were calling for price hikes of up to EUR 30/t, and in some cases EUR 40/t, but managed at most to win only about a third of this, for example with the LD film and standard LLD film grades. Most buyers of the other types covered by this report obtained a rollover. With the injection moulding materials, only prices at the bottom of the range saw any increase. The reason was converters reluctance to purchase when it became apparent around mid-month that the cost of C2 would more than likely fall. For certain applications, the coronavirus put an additional damper on business. The EUR 50/t reduction in the C2 reference at the beginning of March is expected to push prices of all materials down. Although producers will want to pocket some of the decrease, it is questionable whether they will succeed. While the price reduction could provide some sort of stimulus, demand is rather shaky in view of the virus. Injection moulding grades could, depending on the origin, become somewhat less readily available.

PP: Producers’ half-hearted attempts to, alternatively, stave off margin erosion or make margin gains were not crowned with success in February, in particular as they lacked cost increases as an argument. They were only able to lift a few low-lying notations, but this did not affect the PIE range. Converters bought only what they could not do without and otherwise drew down inventories, putting a considerable damper on order activity. The few minor supply limitations were balanced by slack demand. In an attempt to expand margins again, producers will try to hold prices steady in March, despite the cheaper propylene reference. The forecast increase in demand and production requirements for this long working month should help their cause. Planned maintenance turnarounds in Western Europe could be balanced by Russian imports, at least for standard grades. For other products, buyers could see supply bottlenecks here and there. The market for compounds saw no momentum at all in February as the traditional markets – automotive and white goods – showed few signs of life. As supply normally earmarked for those sectors has already been adapted to the soft demand, they appear to be in balance.

PVC: Demands for hikes of EUR 40-50/t for PVC base polymer were voiced by the producers at the start of February already, since they regarded their margins as too thin. Although they met with little success in the first couple of weeks, partial increases were achieved midway through the month. Various minor incidents, including maintenance and shutdowns, boosted producers’ demands for hikes. These curtailed supply in some cases, while higher volumes were being ordered at the same time. Despite the EUR 50/t reduction in the ethylene reference contract at the start of March, producers intend to stick to the rollover that they were targeting in the case of the base resin. The aim is to maintain margins wherever possible. They are likely to be supported by increased call-off orders from major customers, the longer production month and the pre-season preparations. There are also a fair number of restrictions on production, which will likely result in noticeably poorer supply. For compounds, there is little scope for manoeuvre despite falling costs, and price reductions can hardly be expected. Pastes could be affected to a greater extent given their larger exposure to the feedstock. Only the already fixed quarterly prices will most likely prevent more pronounced slippage.

Styrenics: In February 2020, one of these waves reached a new peak. This was due to the renewed increase in the styrene reference (up EUR 50/t). Producers were most likely to be able to pass on the cost increase to customers at the beginning of the month. Over the course of February, they saw themselves increasingly compelled to make concessions in order to sell any quantities at all. The already ample supply of all grades was compounded by a processors’ reluctance to buy – they were counting on price reductions in March due to declining styrene spot prices. These speculations seem to be paying off. The styrene reference for March dropped by EUR 126/t. Even though producers will try to retain a part of the cost reduction, markdowns are thus foreseeable – the crest of the wave is breaking. The coronavirus epidemic has so far had no effect on prices in German-speaking Europe, but has had an impact on order size. Some processors stocked up on materials as much as they could, while others applied the brakes sharply. Producers also felt the effects in markets such as Italy, where plant closures have already occurred. There are fears that the epidemic could also severely affect logistics.

PET: As expected, a reticence permeated the European and global PET markets in February again. The crisis-like developments with the “Covid-19” coronavirus depressed the mood further. Since outflow remained low, the markets were still oversupplied. Although export activity from China declined somewhat, all the warehouses in the chain remain well stocked. Imports are still available but no longer particularly attractive in price terms. Western European prices thus fell slightly, although the costs of PX and MEG had risen somewhat in January. Price reductions resulted for small quantities, in particular. At the lower end of the price range there was less scope for suppliers, but special conditions were agreed on at times here too. Notations for large quantities and spot transactions remained around EUR 200/t below those for the regular, freely negotiated monthly transactions for smaller quantities. Regrind remained more or less stable. The fact that it is more expensive than virgin material is no doubt the new norm now. Demand is expected to pick up with the start of spring. In view of the sluggish situation prevailing overall, however, the question arises as to how far empirical values can currently be used for a forecast. In addition, developments regarding the coronavirus are unpredictable. It would appear quite feasible for areas to be sealed off, coupled with panic buying and production stoppages at facilities all along the value chain. In addition, costs have significantly decreased, and this will also have a substantial impact on the price of PET.

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