Indication of plateau / First decreases possible in some cases / Feedstock costs again a factor / Bottlenecks likely to keep upward trend for PVC and ABS in place
PE: In May, the triple-digit increases that producers were demanding at the beginning of the month despite the minimal EUR 5/t increase in the cost of C2 went through only with LDPE and EVA. In the case of LLDPE and HDPE, on the other hand, the upward trend slowed down significantly. Although material was still short, demand fell considerably in view of the already-high price level. With the arrival of imports in Europe expected fairly soon, producers also showed greater flexibility. In June, prices are expected to go up again because ethylene also rose by a further EUR 30/t. On the other hand, the upticks for most types should again be more strongly oriented to the level of the cost increase, and, unlike in the previous months, there can be no further talk of triple-digit rises. Only EVA could once again see a rise of this magnitude. Generally speaking, the PE market should have reached a price plateau in June that will be very difficult to maintain in the long term due to the arrival of imports. In Q3, prices could again turn downwards and move away from their currently dizzy heights.
PP: In May, PP notations moved higher for the sixth straight month, reflecting once again the tight market situation. The EUR 10/t rise in the C3 reference did not play any role in the fresh hikes of EUR 50-80/t for standard polypropylene. Anyway, the monomer index has not been a major factor in pricing for some time. The price rally does seem to have become less dynamic. In the end, producers were unable to push through the triple-digit hikes they envisaged at the beginning of May. This was simply because the new price records led many converters to curb orders. Some even cancelled orders altogether. For this group of players, polymer prices are just too high, especially in view of the fact that downstream customers are pushing back against paying ever more for their products. Compounders with indexed contracts who tried to charge their customers more to recoup losses from the higher prices they themselves were paying had no success in May. As June began, demand was weakening, so that the potential for PP producers to further pad their margins appears to be more or less exhausted. On the cost side, C3 recorded an increase of EUR 40/t in June.
PVC: A whole year has passed: in May 2021, PVC prices climbed for the twelfth month in succession. As earlier, the driving force was the tight supply situation. The size of the rises again had absolutely nothing to do with the proportionate cost increases for C2. However, most of the hikes in May – unlike in the previous two months – were no longer of triple-digit magnitude. Converters were already hoping that the declining dynamic could signal an imminent trend turnaround. But then, shortly before the end of the month, the market was hit by another report of force majeure, and it remains to be seen how the industry reacts to this. Should the supply bottlenecks decline slightly through the restart of other production plants and increasing imports, the high price level would soften a little further in June. Also with the compounds, the increases would then be smaller despite the supply bottlenecks with various additive components. The development of raw material prices – C3 rose EUR 30/t in June – has been incidental for months now.
Styrenics: Everything comes to an end, even the extreme boom in styrenics. After seven months of sometimes unprecedented premiums and record highs, prices are expected to ease in June 2021. The only reason for this is the sharp decline in the styrene reference (down EUR 401/t) as there has been no improvement in the tight market situation and volumes remain scarce. This is particularly true for the ABS market, which has been undersupplied for a long time, but EPS is increasingly moving in the same direction. The peak notations reached for all styrenics in May are making it more and more difficult for processors to price material costs into their own finished goods. Resistance from downstream market tiers is growing, and the liquidity of many processors is already strained. The ongoing very high price level was also the reason why many suppliers limited margin improvements on top of the cost transfer in May. However, in the case of ABS – and in individual cases also PS and EPS – some producers still insisted on slight margin improvements with an eye towards the material bottlenecks.
PET: The steep surge in PET prices that has been ongoing since January 2021 lost steam in May and in some cases even came to a halt. The production situation gradually improved and the PTA bottlenecks eased. At the same time, the first batches of imports were sighted on the Mediterranean Sea, aiming to take advantage of the high price level in Europe. Meanwhile, the anticipated revival in demand was, quite literally, washed out. The unusually cool and wet weather for May quashed all hopes of a seasonable boost from the beverage market. Consequently, the record high prices at the top of the range have since been capped, while producers were just about able to confine prices for large-to-medium volumes to a rollover, referring to the rising feedstock costs. The nightmare seems to be over. That, at least, is the hope of many buyers. The normalisation should progress on all fronts, with the result that air should now start escaping from the inflated price bubble. Reductions seem fairly certain, and their size will presumably depend on further developments. Should it remain as cool and wet in June as it was last month, the price cuts will probably be larger rather than smaller. On the other hand, a seasonal boost from the beverage market could perhaps help limit the price cuts.