Polyolefins and styrenics drift sideways / Tight supply drives PVC further upwards / PET in downward trend / Effects of storms in the US make themselves felt
PE: Although the cost of ethylene remained stable in September, producers nevertheless called for price hikes of up to EUR 50/t for all types covered by this report. As before, they are doing everything they can to reclaim lost margins. These attempts were, however, seldom successful, and LLDPE materials even declined slightly. On the other hand, the price structure tended to be a little firmer in the second half of the month because producers gave preference to exports, for example, to the United States in order to benefit from the higher prices there after the storms. On the demand side, industry applications and car production remained weak, but the packaging sector was, with few exceptions, quite lively. Nevertheless, some converters were disappointed because, generally speaking, a significant upturn had been expected after the corona high. With some film grades, the lack of metallocene types from the US made itself felt. Despite the small reduction of EUR 10/t in the ethylene contract in October, producers will presumably repeat their calls for price increases of the same amount. Even though demand will presumably continue to pick up, they cannot be assured of success, although the increased exports and the resultant lack of material in Europe should have a consolidating effect. Pipe producers will, after the increases of the last few months, attempt to hang on to the small cost reduction. Overall, a rollover is probable for the vast majority of the PE products.
PP: With C3 costs stable, PP prices moved sideways in September. Hike plans hedged by some producers mostly fell apart, even if some low-lying notations were adjusted upward. Although plant outages reduced production levels, this had little impact, as demand was simply too weak. Sales to the automotive industry gained some momentum, but remained far below normal levels. In October, this market situation looks unlikely to change. In view of the tight supply, it seems doubtful that the EUR 12.50/t dip in the C3 price will be passed on.
PVC: PVC prices in September tended upwards for the fourth month in succession. On the cost side, there were no particular impulses, but the tense market situation with the base material drove prices up. Unscheduled plant stoppages intensified the already tight supply situation. Apart from that, converters endeavoured to fill up their low stocks. For several compounders, the procurement of base PVC was a real problem. Nothing much is likely to change in October as regards the tight market. Although some production plants are resuming operation, more maintenance turnarounds are on the agenda. Against this background, further price rises for the base material are to be expected. In the slipstream of this, compound prices will presumably also increase, while E-PVC pastes will receive an additional boost from the rising cost of the VCM feedstock.
Styrenics: Styrenics prices trended largely sideways or slightly downward in September 2020 after the marginal decline of the SM reference by EUR -13/t. The markdowns for polystyrene films were somewhat more pronounced after larger price reductions were made, especially in distribution. Prices for ABS injection moulding materials, by contrast, have increased because the producers no longer accepted the previously modest price level before the backdrop of scarce availability and the absence of imports. Other materials were hardly affected by the supply situation even if some producers had to cope with restrictions in their deliveries due to plant maintenance or production cutbacks. This is unlikely to change much in the weeks to come, so that the further development of the SM reference – which declined again in October by EUR -33/t – is likely to be transferred to PS and EPS prices, at least in part. For ABS, this is less likely as the EUR +40/t cost increase of butadiene is slowing the decline in composite costs and the low level of imports continues to limit supply.
PET: European PET producers had to make significant concessions in September. Otherwise, it would have been virtually impossible to do any business, especially in the first half of the month. A lack of demand because of the build-up of the second corona wave, attractive import offers plus well-filled raw material stocks and falling prices for the aromatic petrochemicals combined to put significant pressure on prices. In the second half of the month, this pressure then declined significantly. Maintenance turnarounds and production cutbacks had an effect and, at the same time, more material flowed in the direction of the once again hurricane-hit United States. Below the line, this resulted in price reductions of EUR 40-50/t for each of the two late-summer months. Ahead of upcoming maintenance turnarounds at some key sites, European production lines were still running largely smoothly. The fast-rising coronavirus infection figures again being reported in many regions did, however, exacerbate the already weak demand. Especially the mass beverage bottle market was once again very disappointing. No major stimulus in demand can be expected for October either. The pandemic is gathering speed again in Europe, while, at the same time, the supply situation is tending very much lower. This combination should stabilise prices or perhaps even consolidate them to a certain extent.