Polyolefin prices in Europe follow upturn in feedstock costs

In February, polyethylene prices increased by €50-60 per metric ton following a rise of €85 per tonne for the C2 reference price. This marked the first significant price rise since April 2022. Polyethylene prices were up by a further €20-30 per tonne by mid-March after an increase of €30 per tonne for the cost of ethylene.

Polypropylene prices increased by €60 per tonne in February, slightly less than the €80 per tonne increase for the C3 reference price. PP prices are rising by €30 per tonne during the first two weeks of March, which matches a rise in the propylene reference price.

In February, PVC prices increased by €20 per tonne, the first price rise for nine months, following an increase in ethylene costs. However, weak demand and good availability limited price hikes to far less than what producers initially asked for. PVC prices were largely rolled over in early March due to a growing supply surplus.

Polystyrene costs and prices were fairly stable in February but have fallen sharply so far this month. PS prices were down by around €90 per tonne by mid-March following a reduction of €113 per tonne for the styrene monomer reference price. Further price concessions are likely to follow as producers look to stimulate demand.

In February, PET prices fell by €70 per tonne but began to stabilize early March as demand appeared to be recovering ahead of the beverage bottle-making season. At the same time import prices are less competitive compared to European offers.

Producers have continued to run their facilities at reduce operating rates in order to keep stock levels under control in view of the weak demand. There is however sufficient material available across all polymer classes to meet order intake.

Polyolefin supply has however become tighter due to planned and unplanned plant shutdowns over the last two months. The PVC sector is moving into a supply surplus while polystyrene producers’ stock levels are also on the high side. PET producers are starting to raise operating rates due to an upturn in seasonal demand.

The latest supply-side developments include

• LyondellBasell shut down its 320,000 tonnes per year low density PE plant in France for maintenance Feb. 22.
• Total Petrochemicals announced force majeure at the 200,000 tonnes per year PP plant in France March 9.

Demand low
Demand was well below what would normally be expected across all product classes during February and during the first two weeks of March. Converters were buying just enough material to cover their immediate production requirements rather than rebuilding their stock levels. Nevertheless, while demand remained lower than normal for the time of year, there was certainly an improvement in demand compared to the very weak January levels.

There were signs of a seasonal recovery in demand by mid-March, especially for the PET sector as converters began restocking ahead of the spring beverage bottle-making season. The earthquake in Turkey also led to rising PET demand and contributed to growing sales of PET water bottles.

Outlook
Few contract prices had been agreed during the first two weeks of March. However, the contracts that had been agreed by the time of writing indicated that polyolefin prices were settling at a similar level to the feedstock cost rise. PVC and PET contract prices were largely unchanged compared to last month. Polymer prices are more likely to trend towards a rollover during the second half of the month as producers seek to stimulate ordering activity.

Low density and linear low density PE
In February, L/LDPE producers attempted to push through price increases to fully compensate for the €85 per tonne rise in the ethylene contract price. However, in view of the weak demand sellers had to settle for gains of around €60 per tonne.

Demand was well below what would normally be expected as converters bought just sufficient material to cover their immediate production requirements. At the same time supply improved a little but still remained low because of production cutbacks.

In March, L/LDPE producers attempted to factor in the €30 per tonne rise in ethylene costs. LDPE prices had increased by €20 per tonne by mid-month while LLDPE prices matched the cost increase. Supply has tightened because of planned and unplanned plant shutdowns while imports are less available due to delays in shipping from Turkish ports. While demand is recovering slowly it remains below normal levels.

HDPE
In February, high density PE producers were unable to factor in the full €85 per tonne rise in ethylene costs because of weak demand. Blow molding and injection molding prices increased by €60 per tonne with blown film prices rising by €50 per tonne.

Demand was well below what would normally be expected for the time of year as converters bought just sufficient to cover their immediate production requirements. There was a slight uptick in orders from the automotive and food industries but call-offs from the beverage industry remained below expectations. On the supply side, US imports compensated for production cutbacks by local producers. 

In March, producers asked for the whole €30 per tonne rise in ethylene costs to be passed on to converters. By mid-month few deals had been agreed but buyers were pushing for lower price settlements. Supply has tightened and demand still lags behind normal levels.

PP
In February, the size of PP price increases shrank as the month progressed. PP prices increased by €80 per tonne during the first two weeks of February following a similar rise for the propylene reference price. Towards the end of the month, however, price were rising by only €40-60 per tonne.

Producers continued to operate their plants at a low run rate as demand remained well below normal. There was however a plentiful supply of imported material from the Middle East. Demand weakness persisted as converters only bought enough material to cover their immediate production needs.

In March, producers called for price increases matching the €30 per tonne rise in the propylene contract price. By mid-month few deals had been settled but indications are that prices were rising by €20-30 per tonne. Supply is tightening because of planned and unplanned plant shutdowns and lower imports.

PVC
In February, PVC sellers sought to factor the pro-rata ethylene cost increase of €45-50 per tonne into their price negotiations. In most cases, however, producers were unsuccessful to this end because of weak demand and improved material availability. However, base PVC prices increased for the first time in nine months by an average of €20 per tonne. PVC compound prices increased by €5-10 per tonne.

While demand remained below expectations there was a slight overall improvement in February compared with January. Sufficient material was available despite production cutbacks. Imports were less widely available and were becoming more expensive.

PVC producers asked for a small price increase during the first two weeks of March. In most cases however they had to accept a price rollover because of a developing supply surplus. Seasonal demand has increased but remains below normal for the time of year.

Polystyrene
In February, polystyrene producers attempts to raise prices following a €10 per tonne increase for the styrene monomer reference price were only partially successful in certain cases. Instead, prices either remained unchanged at the previous months level or fell slightly.

PS producers continued to operate their plants at reduced rates. There was however sufficient supply due to imports and weak demand.

PS prices tumbled during the first two weeks of March following a reduction of €113 per tonne for the styrene monomer reference price. Producers initially managed to keep the price reduction to below the cost reduction. However, low demand could possibly push prices even lower as the month progresses. Demand from end markets remains very weak and converters are only buying enough material for their immediate needs. Despite PS producers maintaining production cutbacks, stocks remain on the high side.

PET
The much-delayed December paraxylene contract price was finally agreed at the beginning of February with a €195 per tonne decline. PET producers were initially forced to offer triple-digit price concessions following the lower cost settlement and competition from lower-priced imports. However, by mid-month import prices increased sharply and demand also picked up as converters began restocking ahead of the spring beverage bottle-making season. The earthquake in Turkey also led to rising PET demand and contributed to growing market uncertainty. By end February, PET prices had fallen by €70 per tonne.

The European PET market was more stable at the beginning of March. Demand appeared to be picking up as converters restocked ahead of the beverage bottle-making season. At the same time, import prices were less competitive compared to European offers. Overall, PET prices were either stabilizing or increasing slightly against last month.