In March, European polymer markets were being deeply affected by the uncertainty and a sharp rise in energy costs caused by the war in Ukraine. At the beginning of the month, polymer producers called for price increases either in line with the rise in monomer costs, or just ahead of the cost increase.
By the second week of the month, however, polymer producers returned to the market with even higher price targets due to escalating crude oil and energy costs. In polyolefins, producers submitted calls for hikes of up to 250 euros ($278) per metric ton for low density polyethylene, 300 euros ($333) per tonne for linear low density PE, and 330 euros ($367) per tonne for high density PE and polypropylene.
Styrenics producers raised their March price target from 125 euros ($139) per tonne to 350 euros ($389) per tonne to factor in higher energy costs.
Further large price increases are on the cards during the remainder of the month, at least for polyolefins and styrenics in Europe.
In February, polymer producers announced ambitious price hikes aimed not just at recovering cost increases but also improving profit margins. They were in for quite a surprise. Demand was simply not strong enough to support a significant price increase while material availability was more than sufficient.
LDPE and LLDPE prices actually fell by 40 euros ($44) per tonne, HDPE prices either rolled over or were slightly above a rollover, while polypropylene prices presented a mixed picture. PET prices continued to climb and PVC also maintained a firm upward price trajectory. Polystyrene prices fell slightly more than the reduction in styrene monomer costs.
Material availability for polyolefins, polystyrene and PET has improved over the last two months as several production plants have resumed operations after outages and imports have started to arrive in larger quantities. PVC supply, however, is likely to remains tight for a while yet.
Most producers were able to meet contractual obligations for standard material without delay, but others experienced a shortage of certain specialty grades.
In the second week of March, two major producer stopped all new March offers on European PE citing rising costs.
Some of the latest plant outages:
- Vynova announced a partial turnaround for maintenance at its Belgium VCM plant March 10April 1.
- Ineos shut down its PP plant in Belgium and its HDPE plant in France March 15 for planned maintenance
- Sabic’s LLDPE/HDPE swing plant in Gelsenkirchen, Germany reportedly would be unable to produce its Supeer LLDPE (C6) metallocene grades in March and April
- Inovyn shut down its VCM plant in Norway for one month starting March 1 for planned maintenance
- Vinnolit shut down its PVC plant in Germany Feb. 24 for planned maintenance.
Demand has picked up over the last two months after a slow start to the year, but the picture is mixed. Some converters are sitting on ample stocks or don’t have the funds to buy additional material. Others are ordering more material in view of an expectation of sharply rising prices.
For the rest of March and into April, the European polymer price outlook is extremely uncertain. On the one hand, while crude oil prices have risen significantly following the invasion of Ukraine by Russia, oil prices dropped significantly on March 10. It remains to be seen how crude oil prices will move during the rest of the month. It appears most likely, however, that April petrochemical feedstock cost settlements will increase once again. Polymer producers will target full recovery of material and energy cost increases, but will face strong buyer resistance.