PIE - Polymer Price Reports

Standard thermoplastics March 2021

Hefty triple-digit hikes for most grades / Producers often dictate prices / Processors suffer from shortages / Upward trend expected to continue in April

PE: March once again saw hefty triple-digit increases, with the biggest hikes reaching EUR 360/t. It was producers who dictated the prices, as many inventories were nearly empty. Converters from sectors such as food, hygiene and the building industry could have produced far more had they been able to obtain materials. In April, producers will not be content with only passing on the EUR 40/t increase in the ethylene contract. Announcements of price increases of up to EUR 200/t are already on the table and, with few exceptions, they are expected to go through without protest. On the other hand, the high prices may slow things down a little. Supply is still short in Europe. Producers’ inventories are exhausted and as the maintenance season approached, many producers have been unable to build adequate stocks. US plants – some of which are still in the re-start phase after the winter storms – are not yet producing enough to allow for export. What is unclear is whether they can now meet the local demand. European converters have few alternatives and need to become inventive. Recently, for example, the first material from Kazakhstan was sighted on the European market.

PP: “Customers will pay any price,” a polymer producer commented, pointing to the extremely tight supply situation in March 2021. Call it by any other name, but it’s definitely a seller’s market. Due to the extreme tightness and many buyers on allocation, they were focused primarily on refilling inventories. More often than not, the price was secondary. It’s hardly surprising then that the increases became steeper over the course of the month. Against this backdrop, PP prices agreed upon in March were completely decoupled from the EUR 85/t rise in the cost of C3. PP homopolymer crashed through the top-end of the PIE range, with an increase of EUR 350/t. PP copo went a step further, surging by EUR 400/t. Converters, forced to top up inventories on the free spot market, had to pay even more. Last month’s PP notations beat the previous high seen in June 2015 to set a new record. What’s more, for the first time in recent memory, PP copo was at a premium over PP homo. There is no end in sight for the price rally. The market will remain extremely tight, and the tightness undoubtedly will only worsen. In April, buyers can thus once more expect hikes clearly exceeding the C3 reference contract.

PVC: Apart from passing on the pro-rata price increase for ethylene, producers did not need any further arguments to achieve their demands in March 2021. The hikes extended to almost EUR 200/t, although some buyers did get away with just the extra costs being passed on. PVC notations have now risen for the tenth month running. Plant outages for plasticisers in Germany and France pushed up the price of plasticised compounds still further. The increase, attributable to the PVC base material, then faded into the background. Imports were scarcely able to compensate for the shortage of plasticisers. This resulted in the overall curtailment of production. In the case of pastes, by contrast, contract volumes were generally delivered reliably, without further ado. It was not possible, however, to obtain additional volumes for new projects. The EUR 40/t price hike for C2 in April will continue to greatly push up the price of base materials if the supply situation remains tight. Producers are currently demanding hikes of around EUR 120/t for PVC. The additive components are no longer expected to be the chief problem in April, since the situation seems to be slowly stabilising there. Especially for converters working with the construction industry, the next quarter is the most important quarter of the year. Over the past few weeks, these companies have not, however, been able to build up sufficient stocks in a customary manner. Instead, they will have to get by with the material available to them.

Styrenics: The styrenics market is seeing unprecedented price increases: polystyrene prices rose by no less than EUR 500/t in March 2021, and the average premiums charged for EPS were only slightly lower as well. The main reason for the price explosion was a skyrocketing styrene reference – the feedstock went up by an equally unprecedented EUR 501/t. ABS prices, by contrast, rose to a lesser extent because of the more moderate premiums for the composites butadiene (up EUR 20/t) and ACN (up EUR 120/t). Suppliers, however, could not be satisfied with the purely arithmetic increase in composite costs of around EUR 330/t, as they had to buy ACN and sometimes styrene at much higher prices on the spot markets. Against this background, even the EUR 380/t to EUR 400/t hike they actually demanded from buyers did in fact not constitute any margin expansion. In view of the exorbitant premiums, all styrenics prices climbed to new peaks in March 2021. Processors’ reactions to the price developments varied. Some suspended ordering while others placed a high priority on securing volumes. All in all, demand remained quite brisk. New problems emerged on the supply side, however. Particularly in the case of EPS, but also in the case of PS, producers adjusted production to their customers’ forecasts so as not to be left sitting on expensively produced material at a later date. This approach, however, hardly played a role for ABS, where the market has been totally dried out for months due to a lack of imports from Asia. That being said, it must be added that last month’s price explosion is not the end of the road. April will definitely see new triple-digit premiums after the SM reference contract for April soared a further EUR 312/t. Market players expect that a trend reversal could set in afterwards – ie in May – at least for styrene. As for ABS, the supply tightness is not expected to ease before Q3 2021.

PET: The European PET market unexpectedly took another major hit in March 2021. The force majeure declared at the very large PTA site in Geel / Belgium, at the start of the month significantly reduced the availability of direct secondary material. Since imported supplies remained at a poor level, as in previous months, and seasonal demand for bottle production took off with a vengeance, buyers increasingly found themselves vying for the remaining volumes. The already-feverish spot markets immediately shot up by as much as EUR 400/t again. And hefty triple-digit hikes were even due on regular contract transactions. As is customary in such situations, the price of precursor products scarcely played a role in the negotiations. Those who were in need of material had no choice but to pay up. The situation remained turbulent all over the world, with the previous outages in the US driving up prices both there and in Asia. At present, no rapid change in this precarious market situation would appear to be in sight. A further tightening of supply and the corresponding price hikes are more likely in April 2021. In addition, many bottle producers have only been able to purchase less than their expected seasonal requirements so far. This is making them nervous, as usual, and causing a sharp increase in the level of demand, more or less independently of the actual demand on the end market. Almost anything seems possible.

More information on PIE Polymer Price services ...