Downward resin prices trend in Europe continues as costs fall

In July, European standard thermoplastics prices fell across the board because of lower raw material costs and weak demand.

Low density polyethylene prices fell by €90 per metric ton, well in excess of the €50 per tonne reduction for the ethylene contract price. Linear low density PE prices fell by slightly more than the cost reduction. The downtrend for high density PE varied between product types; blown film grades saw the largest price reduction, down by €60 per tonne, blow molding prices fell by €50 per tonne and injection molding prices were €45 per tonne lower.

Polypropylene homopolymer prices fell by much more than the €50 per tonne monomer cost, down by €80 per tonne. PP copolymer injection prices were down a little more than the cost reduction.

Base PVC prices fell by more than the proportionate impact of lower ethylene on the cost base; PVC compound prices fell more sharply because of lower ethylene and additive costs.

General-purpose polystyrene prices fell in line with the €87 per tonne fall in the styrene monomer reference price; high-impact PS prices were down by €100 per tonne.

PET prices showed early signs that at long last they may be bottoming out. Bottle-grade PET prices were mostly unchanged for larger customers where many contracts are linked to cost, and fell slightly for smaller buyers.

Supply low

European producers continued to restrict output at polymer plants in order to better match material availability with the low demand and to avoid a build-up of inventories. Polyolefin supply was bolstered by a steady inflow of imported material; Imports of PVC and PET, on the other hand, were lower in July. Several planned and unplanned plant outages further restrained material availability.

Problems with the European supply of styrene are worsening. BASF shut down its Ludwigshafen styrene plant July 28. The Terneuzen, Belgium, plant run by U.S. supplier Trinseo has halted output due to impaired supply. LyondellBasell and Covestro recently suspended joint styrene production at their Dutch site in Maasvlakte, the Netherlands with the plant expected to remain offline until at least the end of August. A maintenance shutdown of another major plant in Germany is also on the agenda.

Planned and unplanned plant shutdowns in other polymer sectors include;

• TotalEnergies declared force majeure at its Feluy plant in Belgium on July 25 due to technical problems said to be impacting polypropylene production.
• Versalis announced a planned shutdown at its LDPE production site in Italy on July 13.
• BorsodChem shut down its S-PVC plant in Hungary on July 1 for maintenance with restart scheduled for 1st September.

Demand subdued
Demand remained very much lower than would normally be expected across all product sectors and end use markets during the peak summer holiday season. However, the lower prices on offer during July persuaded some converters to top-up inventories.

August trend

During the first two weeks of August, polyolefin prices were largely unchanged following a rollover for the ethylene contract price. However, producers may be forced to reduce prices over the remainder of the month to encourage sales.
Polystyrene prices are surging in early August trading because of a sharp rise in spot styrene prices and an increase of €108 per tonne for the styrene monomer reference price. Styrene supply has tightened considerably because of a series of planned and unplanned plant outages.

Base PVC prices were down by €10-20 per tonne and may crumble further as the month progresses.
PET prices are firming slightly during the first two weeks of August following an increase in feedstock costs, lower imports and a slight improvement in demand.

LLDPE/LDPE
In July, the LLDPE/ LDPE price trend was set by a reduction of €40 per tonne for the ethylene reference price. LLDPE prices fell by slightly more than the cost reduction with LDPE prices falling by €90 per tonne. The sharp fall for LDPE prices can be explained by very low demand and ample supply. Even film converters from the usually resilient packaging sector reported much lower orders than normal.

At the beginning of August, producers went to the market with planned price increases of €100 per tonne, despite a rollover for the ethylene contract price. Converters unsurprisingly refused to accept such large price hikes. L/LDPE prices were largely unchanged by the second week of the month due to ongoing demand weakness and plentiful availability of material. There was very little buying activity in the market as many converters had topped up inventories in July.

HDPE
In July,  HDPE prices trended lower again following the €40 per tonne reduction for the ethylene contract price. The price downtrend varied between grades; blown film grades saw the largest price reduction, down by €60 per tonne, blow molding prices fell by €50 per tonne and injection molding prices were €45 per tonne lower compared to the previous month. Demand remained low as converters bought only sufficient material to cover their immediate needs and many made an early start to their summer holidays. Producers maintained output controls to counter the lower demand.

HDPE producers called for price increases at the beginning of August despite a rollover for the ethylene contract price. However, converters by and large were reluctant to pay higher prices and most early contact settlements were agreed on a rollover basis. Demand remained very weak and there was no shortage of material available.

PP
In July, the PP price trend was set by a reduction of €50 per tonne for the propylene reference price. In view of the weaker demand brought about by the summer holiday season, PP homopolymer prices fell by much more than the monomer cost, down by €80 per tonne. Copolymer injection prices were down by slightly more than the €50 per tonne cost reduction; supply agreements for larger buyers are mostly linked to the feedstock cost development.

At the beginning of August PP producers called for price increases of €50 per tonne despite the propylene contract price remaining unchanged. Converters were not prepared to accept price increases and early contract price settlements were mostly agreed on a rollover basis. Homopolymers are in good supply but copolymer availability has tightened as a result of plant outages. Demand remains at a very low level.

PVC
In July, a decline of €40/tonne for the ethylene contract price and a further reductions in the cost of additives pushed base PVC and PVC compound prices even lower. Base PVC prices fell by slightly more than the cost base while PVC compound prices fell sharply as a result of much lower additive costs. The summer holiday season has further exacerbated an already weak demand situation. There was more than enough material available despite lower imports and a further plant shut down for maintenance.

PVC prices continued to slide at the beginning of August even though the cost of ethylene had stabilized. Base PVC prices were down by €10-20/tonne during the second week of the month. Supply has shortened a little due to fewer imports and output restrictions at European plants. With the construction industry remaining in the doldrums, demand weakness persists.

PS
In July, PS prices declined further following an €87 per tonne reduction for the styrene monomer reference price. General-purpose PS prices fell by slightly more than feedstock cost with high-impact grades falling by €100 per tonne. There was sufficient material available to meet demand despite production cutbacks. The start of the holiday season led to even lower PS demand.

In August, a surge in spot styrene prices and styrene monomer costs led to a sharp price upturn for polystyrene. Spot styrene costs have risen because of tighter supply brought about by a series of planned and unplanned plant outages. General-purpose PS price settlements increased by a similar magnitude to the €108 per tonne rise for the styrene monomer cost. There is sufficient material available to meet the low level of demand. The large price increases has contributed to even lower levels of demand.

PET
In July, there were early signs that PET prices may at long last be about to bottom out. Bottle-grade PET prices were mostly unchanged for larger customers where many contracts are linked to cost, and fell slightly for smaller buyers. The June paraxylene reference price settled at a lower level, down €15/tonne, and low-cost imports from the Far East fell in June for the first time this year. There was also signs of a modest upturn in demand as buyers started to replenish their inventories.

During the first two weeks of August, PET prices were firming slightly as the paraxylene contract price was finally settled with an increase of €30 per tonne following protracted discussions. There was no noticeable change to the low levels of demand in early August and producers continue to curb output at PET production plants.