Standard thermoplastic prices have fallen sharply over the last two months following a downturn in feedstock costs and ongoing demand weakness.
Polyolefin producers attempted to limit price discounts to improve their flagging margins, but their efforts were largely unsuccessful.
Low density polyethylene prices have tumbled by €170 per metric ton over the last two months compared to a reduction of €90 per tonne for the ethylene contract price. Linear LDPE prices, where supply is somewhat tighter, fell by €110 per tonne while high density PE prices fell by €110-120 per tonne during the same period.
In May and June, polypropylene prices fell by a combined total of €120-140 per tonne against a reduction of €95 per tonne for the propylene contract price. Copolymer injection material saw the largest price reduction due to very weak order intake.
PVC prices have fallen by significantly more than the proportionate impact of lower ethylene on the PVC cost base. Base PVC prices have fallen by €150 per tonne during the last two months compared to a proportionate €45 per tonne reduction in ethylene costs. PVC is under pressure from low demand, a mounting supply surplus and competition from cheap imports.
In May, general purpose polystyrene prices increased by €10-15 per tonne following a surge in benzene costs, which led to a rise of €55 per tonne for the styrene monomer reference price. In June, PS prices closely matched the €127 per tonne reduction for the styrene monomer reference price.
PET prices remain under pressure as a result of lower-than-expected demand, growing price competitiveness from Asian imports and falling feedstock prices.
Material availability is lengthening despite production plants continuing to operate at reduced rates. A supply surplus is developing across most product sectors. The lower production rates from local producers are being countered by imported material, particularly for PET, PP, PVC and LLDPE.
The latest supply-related developments are summarized below;
- Spanish supplier Repsol shut down a polypropylene plant in Tarragona, Spain on June 13 due to “unforeseen and unavoidable technical issues,” and the company has also declared force majeure for the material. No indication has been given on a restart.
- BorsodChem plans to shut down its S-PVC plant in Hungary on July 1 for maintenance with restart scheduled for Sept. 1.
- There was flare-up activity at BASF SE’s steam cracker in Ludwigshafen, Germany, starting June 9 for the following two weeks. The company cited maintenance works as the reason behind the flaring.
- Borealis announced late May a shut down for maintenance at three Austrian PP and PE production lines
- In mid-May, Czech supplier Orlen Unipetrol announced a force majeure for polypropylene from its Litvinov plant following a fire. The earliest production restart is expected in Q3.
Polymer producers were disappointed when a much hoped for upturn in demand failed to materialize during the last two months. Order activity from converters across all major market sectors including automotive, construction and packaging, remained extremely low due to the overall weakness of the economic situation in Europe. Demand has also been adversely impacted by bank holidays and the start of the summer holiday season. In addition, stocks at converters are on the high side and as a result buyers are only ordering what is absolutely necessary for their immediate production needs.
Most polymer classes are expected to see further price reductions by the end of the month due to a growing supply surplus and subdued sales. In July, there is unlikely to be a significant change to the downward price trend.