European polyolefin, PVC prices down on weak demand, better supply

Polyolefin and PVC prices have been under continued downward pressure over the last two months because of lower feedstock costs, ongoing demand weakness and a growing supply surplus.

In April, polyolefin prices turned downward following a decline of €40 per metric ton for both the C2 and C3 contract prices. Base PVC prices fell by more than the proportionate €20 per tonne impact of the lower ethylene price on the PVC cost base because of ongoing demand weakness.

Polystyrene prices increased on average by €5-10 per tonne following a rise of €19 per tonne for the styrene monomer reference price. PET prices stabilized because of higher import prices and a rise in key feedstock costs.

Polyethylene prices have fallen €20-30 per tonne during the first two weeks of May, slightly more than the €10 per tonne reduction for the cost of ethylene. Polypropylene prices have also fallen by more than the €15 per tonne reduction for the propylene cost settlement.

PVC prices remain under strong downward pressure because of a developing supply surplus, low demand and competition from cheap imports. Base PVC prices have fallen  by €30 per tonne in early May.

Polystyrene prices have increased once again this month because of another rise for the styrene monomer reference price; this time up by €55 per tonne. PET prices appear to be on the rise at long last. PET producers are benefiting from a return to more normal demand and more expensive imports.

Polymer production plants have for the most part continued to operate at reduced rates over the last two months to avoid excess stock levels. Despite this, low density PE, PVC and PS materials are all trending longer this month. linear low density and high density PE and PP markets are more balanced but the supply situation is improving. PET producers, on the other hand, have loosened their output restrictions as seasonal demand appears to have finally taken off.
A selection of the latest production issues are summarized below;

• TotalEnergies lifted the force majeure on deliveries of polystyrene from its sites at Gonfreville and Carling in France effective May 4.
• TotalEnergies lifted force majeure on deliveries of PP at its site in France on May 8.
• Unipetrol shut down its PE site in the Czech Republic for maintenance on April 24.
• Naphthachimie restarted its 740 kilotonnes per year ethylene production plant in France on April 19.
• Vinnolit announced force majeure at three PVC plants in Germany on May 11.

Demand low
Demand weakness remained a feature of most polymer markets over the last two months. Market operators expected an upturn in order activity in May after the very disappointing month of April. However, the anticipated revival in demand had not yet occurred during he first two weeks of May. Even those sectors which would normally experience a seasonal upturn in demand such as construction and agriculture, saw very little improvement in call-offs. Demand was further dampened by production stoppages at converters because of the large number of public holidays in the last two months.

Bottle-grade PET is somewhat of an exception as demand for bottle-making appears to have returned to more normal levels in May.

June outlook
Polyolefins and PVC prices may see further softening over the rest of the month because of low demand and improving supply. For June, polymer prices are most likely to fall further. As crude oil prices are firmly trending downward, lower feedstock cost settlements are on the cards. While demand can reasonably be expected to pick up, a developing supply surplus for some classes could also drag down prices.

LLDPE, LDPE

LLDPE and LDPE prices came under growing pressure during the course of April because of the €40 per tonne reduction in the cost of ethylene and low demand. LDPE prices fell by slightly more than the cost reduction because of weaker than expected demand. LLDPE prices slipped by only €20-30 per tonne on tighter availability.

In May, LLDPE producers initially attempted to hold price discounts to the €10 per tonne reduction for the ethylene reference price. However, weak demand and ample supply soon put paid to such plans. LDPE prices had fallen by €30 per tonne by mid-month while LLDPE, where material availability was somewhat tighter, saw prices fall by €20 per tonne.

A seasonal demand upturn failed to materialize and production was maintained at a reduce rate. Further price reductions are possible during the remainder of the month, particularly for LDPE, where a supply surplus is developing.

HDPE
In April, HDPE prices fell between €35-45 per tonne, which was more or less in line with the €40 per tonne reduction for the ethylene reference price. Sellers were forced to make further price concessions over the course of the month as demand failed to recover as expected. Supply was tight as producers cut back production but availability was swelled by imported material.

HDPE producers initially tried to restrict price discounts to the €10 per tonne fall in the C2 reference price at the beginning of May. Converters were however looking for a bigger price reduction and sellers had to concede discounts of at least €20 per tonne with larger customers achieving even lower prices.

The much hoped for demand upturn didn’t materialize as converters bought just sufficient for their immediate production needs. Producers continued to curb production while imports were readily available.

PP
In April, PP producers initially planned for a price rollover, but the €40 per tonne reduction for the propylene reference price and fragile demand forced sellers to pass on the full cost reduction to converters. There was sufficient material available to meet demand despite production cutbacks. Converters were only ordering enough material to meet their immediate production needs.

PP sellers were prepared to concede price discounts in excess of the €15 per tonne reduction for the propylene reference price in early May so as to avoid a build-up of excess stock. PP prices fell by €30 per tonne with further discounts considered likely during the rest of the month. The supply situation is improving, despite the reduced production rates. Incoming order activity remained on the low side with few signs of an upturn in sight. Production stoppages due to bank holidays also dampened demand.

PVC
In April, base PVC prices slipped by €40-50 per tonne, which was twice as much as the proportionate impact on the PVC cost base from the €40 per tonne reduction in the cost of ethylene. Flexible PVC compound prices also slipped by €40-50 per tonne while rigid PVC compound prices fell by only €20 per tonne due to higher additive costs.

The supply situation for base PVC improved during April but demand failed to recover after Easter as expected.

PVC prices remained under pressure because of a developing supply surplus and competition from cheap imports. Base PVC prices were down by at least €30 per tonne during the first two weeks of May, which was well in excess of the impact of lower ethylene on the PVC cost base. An excess supply situation is building, despite the production curbs, due to growing import volumes.

PS
In April, polystyrene sellers were mostly unsuccessful in their attempts to pass through in full the €19 per tonne rise for the styrene monomer reference price. Most GPPS contracts were settled well below the cost rise at between €5-10 per tonne. There was more than enough material available to meet demand, despite production cutbacks and a force majeure being called at TotalEnergies’ plant in France.

Demand failed to recover as expected following the Easter break.

PS prices increased in line with the €55 per tonne rise for the styrene monomer reference price during the first two weeks of May. There was more than sufficient material available despite the production plants still operating at reduce rates. A much hoped for improvement in demand failed to materialize; many converters held back from making additional purchases as prices are expected to fall in June.

PET
In April, PET prices stabilized because of higher import prices and an increase in the cost of paraxylene. The European Commission has initiated an antidumping investigation on PET imports from China and regional buyers have been avoiding this origin as antidumping duty will be applicable on en-route cargos as well. Meanwhile, buying activity improved a little in April, but the cool weather negatively impacted overall sales.  

PET prices nudged a little higher during the first two weeks of May following a couple of months of stable prices. Prices are being driven upward by an increase in the April paraxylene feedstock cost settlement; up €30 per tonne, and by the more expensive cost of imported material. Also, incoming orders from bottle makers are finally approaching more normal levels. There is more than sufficient material available to meet demand.