In March, polyolefin prices more or less mirrored the rise in ethylene and propylene costs in Europe, although the rise did not always match the increase in monomer. Low density polyethylene prices increased by just €10 per tonne compared with the €30 per tonne rise in ethylene costs largely because of weak demand.
Linear low density PE prices, on the other hand, increased in line with the monomer cost rise because of reduced availability. High density PE prices increased by just less than the €30 per tonne rise in the ethylene reference price.
Polypropylene producers attempted to pass on the €30 per tonne increase in propylene costs but their efforts were largely unsuccessful with deals also settling on average at just less than the increase in monomer.
PVC producers attempted to factor in the proportionate €15 per tonne rise in the cost of ethylene. Base PVC prices, in most cases, were however rolled over from the previous month because of ongoing demand weakness.
Polystyrene prices fell by €80-90 per tonne, which was less than the €113 per tonne reduction for the styrene monomer reference price. Bottle-grade PET prices began to stabilize and were largely unchanged from the previous month.
In April, polyolefin prices turned downward following a decline of €40 per tonne 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 on the PVC cost base because of ongoing demand weakness. Polystyrene prices increased on average by €10 per tonne following a rise of €19 per tonne for the styrene monomer reference price. PET prices firmed slightly because of higher import prices and an upturn in seasonal demand.
There was sufficient material available across all polymer classes to meet demand during the last two months despite production curbs and a series of planned and unplanned plant outages.
A summary of selected production issues for European polymer plants:
- The LyondellBasell cracker at Berne, France was shut down April 3 due to a fire.
- The Ineos PP plant at Lavera, France was taken offline April 6 and force majeure was declared due to strikes. The plant was restarted as of April 13 while force majeure remained in place.
- Kem One declared force majeure on PVC output from Balan, France on March 23 due to VCM issues stemming from strikes. Force majeure was lifted on April 14.
- Borealis shut down PP production plants in Belgium on March 28with restart to be announced.
- Repsol Quimica shut down its styrene plant in Spain on 30th March with restart to be announced
- TotalEnergies declared force majeure on March 20 for polystyrene, citing supply restrictions due to the escalating nationwide strikes.
Demand remained below what would normally be expected at the time of year throughout the last two months. In March, converters bought just sufficient material to meet their immediate production needs as prices were expected to fall in April. The Easter break also put a dampener on demand in early April. There has however been a small upturn in seasonal demand during April across the agricultural, building and beverage sectors.
As of mid-April, crude oil prices and spot monomer prices are rising, which could lead to higher monomer cost settlements in May. With the pressure from rising costs, polymer producers are likely to press for higher prices. Whether or not they can successfully pass through the higher costs will depend largely on demand. Perhaps, the low buying appetite in several end user markets will keep the volumes of demand at modest levels.In March, polyolefin prices more or less mirrored the rise in ethylene and propylene costs,