L/LDPE
At the beginning of October, European L/LDPE markets reversed direction following five consecutive months of strong price reductions. Despite a drop of €45 per tonne in the ethylene contract price, producers originally called for prices to increase by €150 per tonne, including a portion to cover the higher cost of energy. Buyers strongly resisted calls for such large price hikes and deals were generally settled between a rollover to a small price rise.
L/LDPE demand remains well below normal, although a small upturn after the holiday period was noted. Converters are concerned about the deteriorating economic situation and worries about a possible recession.
European producers have trimmed production in response to the low demand and material availability has also been impacted by strikes in France. A lively inflow of imports has however made up for the drop in local supply.
HDPE
At the beginning of October, European HDPE markets reversed direction following five consecutive months of strong price reductions. Despite a drop of €45 per tonne in the ethylene contract price, producers originally called for prices to increase by €100/ per onne, including a portion to cover the higher cost of energy. HDPE sellers pushed through a sizable proportion of the planned cost rise with prices rising by €50 per tonne.
HDPE availability is slightly tighter compared to L/LDPE following production cutbacks and the impact of strikes in France. There is however sufficient material available to meet the needs of converters.
Converters are concerned about the deteriorating economic situation and worries about a possible recession. Hence, HDPE demand remains below normal, although a small upturn was noted as converters started to slowly build up stocks in expectation of an imminent price upturn.
PP
European PP producers initially tabled planned price hikes of €50-100 per tonne, including an energy surcharge, despite a €50 per tonne lower propylene settlement. This follows five straight months of hefty drops. The initial hike requests were trimmed as underlying demand remained weak and energy surcharges could not be fully reflected on transactions. Settlements varied widely; from a rollover to price increases of up to €50 per tonne.
PP demand remains at a low level, although it has been noted that some players are tentatively building up stock levels in anticipation of a price upturn soon.
PP producers have trimmed production run rates by 20-30 percent in recent months in an effort to achieve better market balance. Material availability has also been disrupted by strikes and planned and unplanned plant shutdowns. Supply has however been supported by a steady inflow of imported material.
PVC
PVC producers mostly began October prepared to accept slight price decreases in view of the subdued demand, competitive import costs and a fall in ethylene costs. Accordingly, base PVC prices fell by €25-30 per tonne to hit a new year-low. Producers were reluctant to issue larger drops due to the high production costs in Europe when compared to the rest of the world.
Producers have reduced run rates in order to achieve a better demand-supply balance. Local supply gaps are more than adequately filled by competitively-priced imports from the USA and India. High European prices are tempting sellers to divert more of their cargoes to Europe.
Purchasing activity has slowed further in October across all end-use markets, with the exception of pharmaceuticals. Stock levels at converters are comfortable amid growing uncertainty about economic prospects going forward.
PS
Polystyrene prices dropped again in October despite a €9 per tonne rise in the styrene monomer reference price. Producers took into consideration a reduction in energy costs and low demand. General-purpose polystyrene (GPPS) prices fell by €50 per tonne with high impact polystyrene (HIPS) prices down by €40/ per onne. Further price discounts are expected later in the month.
PS supply is more than adequate to meet the subdued levels of demand despite production cutbacks and the declaration of force majeure by a major producer at a site in France.
Demand has fallen due to growing concerns about an economic downturn and inflation. While packaging demand has held up fairly well, purchasing activity from other end-use sectors such as consumer goods and furniture is declining. A downturn in the construction sector has also adversely affected demand for GPPS and expanded polystyrene (XPS).
PET
PET prices have fallen for the third consecutive month after reversing direction in August. PET contract prices were down by €80/tonne in October as a result of aggressive import prices, lower costs and weak demand.
European PET producers have been under growing pressure from aggressive import offers, mainly from Vietnam, India, South Korea and China. Import prices are more competitive as a result of falling freight rates out of Asia, which are now at their lowest since 2020. While PET demand for local product remains low. European converters are increasingly meeting more of their needs with cheaper Asia material.
PET producers, who are stuck between higher costs and weaker consumption, have lowered run rates or conducted maintenance shutdowns. However, this did little to support overall sentiment and prices are more likely to extend losses into November.
