Polyolefin prices up sharply in Europe on higher monomer costs

Standard thermoplastic resin prices in Europe moved higher because of rising feedstock costs during the first two weeks of February.

Polyethylene prices increased by 60-80 euros per metric ton, which was slightly less than the €85 per tonne rise in the ethylene reference price. Polypropylene prices matched the €80 per tonne rise of for the propylene reference price.

PVC prices increased €20-30 per tonne at the start of February after nine months of price declines. Polystyrene prices edged slightly higher during the first half of February after the styrene monomer reference price increased by €10 per tonne.

In January, standard thermoplastic classes, with the exception of polystyrene, saw a steep price reduction because of falling feedstock costs and weak demand.

Polystyrene prices bucked the downward price trend after steep cost increases for precursors benzene and styrene monomer of €145 per tonne and €115 per tonne, respectively. As a result, polystyrene prices gained €100 per tonne.

Low density PE and linear low density prices fell by €70-80 per tonne, which was less than the €95 per tonne reduction in the cost of ethylene, largely because of energy cost pass-through. High density PE blow molding and blown film prices fell €70 per tonne whereas injection molding prices fell only by €60 per tonne, due largely to higher demand.

PP prices fell €70-80 euros tonne against a decline of €95 per tonne for the propylene reference price. Producers cited higher energy costs as a reason for restricting price discounts to below the cost reduction.

PVC prices remained under pressure from lower costs, weak demand and imports at the start of the new year. Base PVC prices fell by €100 per tonne, well in excess of the proportionate impact of lower ethylene prices on the PVC cost base.

PET prices fell by a further €80 per tonne last month because of weak demand and competitively-priced Chinese imports. There was also growing concern from processors over the lack of clarity and delayed settlement of the paraxylene reference price. There were signs that European PET prices were stabilizing early February because of more expensive import prices and higher demand.

Supply low
Material availability remains on the low side as regional producers are reducing operating rates at their plants to avoid a supply overhang amid weak demand. Nevertheless, there was sufficient material to meet demand across all product sectors. Regional supply was supplemented by a steady inflow of imported material, particularly of PET, PVC and polyolefins.

A selection of the latest production developments is presented below;

• Four PP lines operated by Borealis in Belgium will undergo planned maintenance programs set for Feb. 2 to March 2.
• The LyondellBasell cracker in Berre, France, offline since a fire in August 2022, will not go back onstream until early 2023.
•  According to market sources, Dubai-based Equipolymers reduced operating rates at its PET site in Schkopau, Germany with one of the two PET lines taken offline.

Weak demand
In January, polymer demand picked up a little across all polymer classes as processors started to restock after the holidays  Demand was however far below what would normally be expected for the time of year. Sellers noted a slight improvement in sales during the first two weeks of February. The automotive, food packaging and pharmaceuticals sectors exceeded expectations while demand from the construction and industrial sectors remained sluggish.

Outlook
Many buyers are playing a waiting game this month and working whenever possible from stock. While demand has picked up slightly this month, it remains below normal for the time of year. It is therefore possible that polyolefin price increases could moderate a little as the month progresses.

LLDPE, LDPE
L/LDPE prices declined during the first month of the new year after the ethylene reference price settled down by €95 per tonne. LDPE film prices fell by €80 per tonne with LLDPE prices falling by around €60 per tonne.

Material availability remained very tight as producers maintained strict production controls. LDPE availability was supplemented by a steady inflow of imports from Asia and the US, while LLDPE imports were down on the previous month.

While demand picked up in January as converters rebuilt stocks it was still far below what would normally be expected for the time of year.

LDPE prices increased by €80 per tonne during the first two weeks of February, which almost compensated for the €85 per tonne rise in the ethylene reference price. LLDPE prices, on the other hand, increased by just €60 per tonne, largely because of competition form imported material.

HDPE
In January, HDPE blow molding and blown film prices fell by €70 per tonne after the ethylene reference price declined €95 per tonne. Producers cited higher energy costs as the reason for prices falling by less than feedstock costs. Injection molding prices fell by only €60 per tonne largely because of higher demand.
While supply remained tight as producers operated their plants at a low level, material availability was supplemented by U.S. imports.

Demand recovered at the start of the new year but was nevertheless below expectations. Injection molding demand benefited from a rise in sales to the automotive, food and pharmaceuticals sectors.

HDPE producers were unable to factor in the full €85 per tonne rise in ethylene costs during the first two weeks of February because of weak demand. Prices were up by €70 per tonne across the board. Supply remains tight but availability was sufficient.

PP
In January, PP homopolymer injection and copolymer injection prices fell by on average €70 per tonne while homopolymer film prices were down by €80 per tonne compared to a reduction of €95 per tonne for the propylene reference price. Producers cited higher energy costs as a reason for restricting price discounts to below the cost reduction.

Supply remained tight as producers continued to operate plants at a low level, but availability was supplemented by imports from Eastern Europe.

Demand was below normal in January despite processors beginning to rebuild their inventories. Automotive sector demand picked up well but sales to the film sector disappointed.

PP prices increased by €80 per tonne during the first two weeks of February following a similar rise for the propylene reference price. Producers continued to operate their plants at a low run rate as demand remained below normal.

PVC
PVC prices remained under pressure from lower costs, weak demand and imports at the start of the new year. Base PVC prices fell by €100 per tonne, well in excess of the proportionate impact of lower ethylene prices on the PVC cost base. Rigid PVC compound prices fell by €75 per tonne with flexible PVC compound prices down €60 per tonne on stable plasticizer costs.

Supply was adequate despite European producers continuing to operate plants at a low level. Demand was restrained by the short January production month and by processors very slowly starting to top up their warehouses.
In February, PVC sellers sought price hikes of up to €55 per tonne citing the increase in ethylene costs. While prices have risen €20-30 per tonne following nine months of price declines, weak demand has prevented producers from raising prices by quite as much as planned.

PS
In January, PS producers raised prices by €100 per tonne, which was less than the €115 per tonne increase for the styrene monomer reference price.

Material availability remained low as producers kept plants operating at low levels. There was however sufficient material available. The return of a PS plant following an unplanned outage further supplemented supply.

There was little change in the low demand situation at the start of the new year with restocking activity by processors less than expected.

PS prices edged slightly higher during the first half of February after the styrene monomer reference price increased by €10 per tonne. Some processors managed a price rollover while others accepted gains of €10 per tonne with prices rising on average by €5 tonne. High-impact PS prices were mostly unchanged. Demand was a little higher compared to the previous month while supply was adequate.

PET
In January, a lack of clarity regarding the much-delayed paraxylene (PX) cost settlements for December and January, put an added strain on trading activities. The January PX reference price finally settled down €55 per tonne on 3rd February following a decline of €195 per tonne for the December contract. PET prices fell by a further €80 per tonne last month because of weak demand and competitively-priced Chinese imports.

While bottle-makers believed that prices had started to bottom out and began to replenish inventories in January demand still remained well below normal.

Material availability was more than adequate last month despite producers keeping a firm brake on production rates. PET import prices were becoming a little less competitive compared to previous months.
There were signs that European PET prices were stabilizing early February because of more expensive import prices and higher demand.