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In June, ethylene, propylene and styrene monomer costs continued to fall in Europe. For July, ethylene and propylene contract settlements were rolled over form the previous month, whereas the styrene monomer contract plummeted following a sharp reduction for benzene.
The PET market is enjoying a rare run of success with prices firming further over the last two months. European PET producers have benefited from rising demand and the virtual disappearance of Chinese imports after the imposition of definitive anti-dumping duties since April.
Linear low density polyethylene/low density PE
LLDPE and LDPE prices continued to fall in June following a reduction of €30 per metric tonne for the ethylene reference price and ongoing low demand. Producers attempted to keep prices stable to preserve their margins. However, a combination of good material availability and weak demand pushed prices downward. Both LDPE and LLDPE prices fell in line with the €30 per tonne reduction in the cost of monomer.
LLDPE and LDPE prices were largely rolled over in line with unchanged ethylene contract price at the beginning of July. The LLDPE, LDPE market is well balanced as producers manage production to match the low level of demand. One major producer recently called force majeure for LDPE while another plant is down for maintenance. LLDPE supply is tighter than for LDPE as there are fewer imports arriving; yet there is still sufficient material available to satisfy demand.
High density PE
HDPE prices continued to fall in June because of lower feedstock costs, better availability and ongoing weak demand. Producers managed to keep price discounts for blow molding types to just below the €30 per tonne reduction for the ethylene reference price, but discounts for blown film and injection molding grades moved in parallel with the reduction in the cost of monomer. End user demand for blow molding and injection molding articles picked up slightly, whereas blown film demand remained at a low level.
HDPE prices were stable during the first two weeks of July following from the unchanged ethylene cost settlement. Supply remained adequate for standard grades, despite production cutbacks, but availability for specialty material has tightened. Buying activity slowed down as the holiday season approached, yet some converters stocked-up in anticipation of rising prices later in the summer.
Polypropylene
PP prices continued to fall in June despite attempts by producers to restrict price rebates to less than the €30 per tonne fall for the propylene reference price. By the end of the month, prices for all PP grades had either fallen by the same or slightly more than the reduction in the cost of monomer. Supply was adequate despite production cutbacks and fewer imports arriving.
In the first two weeks of July, PP prices remained unchanged from closing levels of the previous month following a rollover for the propylene reference price. Material availability has tightened as a result of several planned and unplanned plant outages. Again, fewer imports were arriving in early July. Demand slackened further as the summer holiday season approached, although some converters sought to purchase additional material in anticipation rising prices later in the summer.
PVC
In June, base PVC prices fell more or less in line with the proportionate reduction in the cost of ethylene. Flexible PVC compound prices fell by €20 per tonne while rigid PVC compound prices remained stable. There was more than sufficient material available to meet demand, despite the cutbacks in output by local produces. Demand remained at a very low level with few signs of an upturn in order activity.
In early July, PVC producers called for price increases following the announcement of anti-dumping duties for S-PVC from the US and Egypt, despite a rollover for the ethylene contract price. Converters soon rebuffed calls for hikes of €50 per tonne, but nevertheless, producers managed to push through gains of €20 per tonne. Supply remained very tight but there was still enough material to go round. Ordering activity from the construction sector remains very low.
Polystyrene
In June, polystyrene producers had targeted price reductions of between €5-10 per tonne. However, general-purpose polystyrene (GPPS) prices were down by slightly more than the €30 per tonne fall for the styrene monomer reference price with high-impact PS prices some €50 per tonne lower. There was more than enough material available to meet demand despite the ongoing production cutbacks. Demand remained low as converters bought only minimal volumes in anticipation of further price reductions ahead.
PS prices have indeed fallen further this month after the €138 per tonne crash for the styrene monomer reference price. GPPS prices are down more or less in line with the reduction in the cost of monomer. The already weak demand is suffering further this month as converters wind down their operations prior to summer holiday plant shutdowns. Material availability remains tight, yet there is still sufficient supply to meet demand.
PET
In June, PET prices increased by €20 per tonne, despite the May paraxylene reference price settling down by €38 per tonne, which just offset the €38 per tonne April PX rise. The PET market was adequately supplied by local producers; import prices increased due to the higher cost of logistics. Furthermore, Chinese PET has mostly disappeared from the market after the imposition of definitive anti-dumping duties early April. Demand recovered further last month to reach normal levels as a result of hot summer weather and the European Football Championships.
PET prices have started July on a firm note with gains of €10-20 per tonne. PET producers are taking advantage of positive demand trends and only a modest rise in feedstock costs (the June paraxylene contract price was settled with a rise of €6 per tonne with the July MEG contract price unchanged) to raise profit margins.
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