In June, a combination of weak demand and improving supply led to a further decline in European standard thermoplastic prices, despite little change to monomer costs.
Polyolefin prices saw the biggest price reductions. Polyethylene and polypropylene price developments bore no relation to monomer cost settlements. The ethylene reference price settled at a rollover with propylene settling down by €10 per metric ton. Low density PE prices fell by €170 per tonne, Linear low density PE prices fell by €150 per onne and high density PE prices were down by €150 per tonne. Homopolymer and copolymer PP prices declined by €200 per tonne.
Polystyrene prices either rolled over or fell slightly after the styrene monomer reference price increased €16 per tonne. It was a similar picture for base PVC prices, while flexible PVC compound prices fell as a result of lower plasticizer costs.
PET prices turned upward in June following a rise of €75 per tonne in the paraxylene reference price. However, a growing volume of cheaper imported material limited price increase to €40 per onne.
In June, polyolefin demand was particularly weak although other polymer classes also experienced lower sales volumes than would normally be expected. Converters took a cautious approach given growing economic uncertainty, soaring energy costs and rising inflation. Buyers were also holding back from making additional purchases as prices were widely expected to drop further in July.
The construction sector boom appeared to be flagging while the automotive sector remained weak. The economic uncertainty also weighed heavily on packaging and consumer goods markets. The beverages sector, on the other hand, saw a surprise demand upturn in June.
The supply situation has improved across all product sectors since early summer as several production plants are now back on stream following outages. In the polyolefin sector, most production facilities are operating without interruption. While a number of PVC and styrenics production plants were not fully operational, there was sufficient material available to meet the low level of demand.
Local supply was supplemented by a growing volume of competitively-priced imported material across most product classes.
A selection of the latest supply-side developments in polymer markets are summarized below;
- Covestro declared force majeure for styrene on July 4 due to the breakdown of the production plant jointly operated with LyondellBasell in Maasvlakte, the Netherlands;
- Borealis declared force majeure July 5 for cracker products from Stenungsund, Sweden. Borealis cited a technical issue as the reason for the outage;
- Damage to an OMV refinery in Schwechat, Austria, is much more serious than initially assumed. A complete restart and full utilization of the refinery can only be assumed for August or September 2022. It remains unclear exactly what this means for the cracker, which is a key supplier of ethylene and propylene for polyolefin plants at OMV unit Borealis;
- TotalEnergies declared force majeure 21 June for EVA production at its domestic facility in Gonfreville, France.
In July, polymer price trends are showing a mixed picture. Polyethylene and polypropylene prices are declining by triple-digits following respective reductions of €100 per tonne for the ethylene reference price and €120 per tonne for propylene. Polyolefin prices are under added pressure from imports and lower holiday season demand.
PVC prices are also coming under pressure from the ethylene cost fall and lower seasonal sales.
The styrene monomer reference price increased €155 per tonne following higher ethylene costs and a surge of €386 per tonne in benzene costs. Sellers are confident of achieving a small price premium over the SM cost rise.
PET prices are also expected to increase as paraxylene costs are rising sharply.