Standard European thermoplastic resin prices fell across the board once again in December trading following a downturn in upstream costs. but stabilized at the beginning of 2024.
In December 2023, low density polyethylene, high density PE and polypropylene prices fell by 30 euros per metric ton, which matched the reduction of €30 per tonne for both the ethylene and propylene contract prices. Linear low density PE prices fell by €50 per tonne due to very weak sales.
Base PVC prices fell by €30 per tonne, which was more than the proportionate reduction of €15 per tonne on the PVC production cost base resulting from the €30 per tonne decline in the cost of ethylene. Polystyrene prices fell by €110 per tonne, which was slightly less than the €116 euros tonne reduction for the styrene monomer reference price. PET prices slipped €15 per tonne as a result of lower costs and very weak demand.
Prices across all polymer classes were stable during the first two weeks of January as both the ethylene and propylene contract prices remained unchanged from December 2023 levels.
Base PVC prices also rolled over following unchanged ethylene. Polystyrene producers called for a €10 per tonne price increase at the beginning of the new year, but had to settle for no changes. PET prices were largely unchanged despite a reduction in the December paraxylene reference price.
Supply tight
Polymer supply is very low across all classes. Producers are maintaining low run rates in order to match availability to the low demand and to prevent surplus stocks developing. There have also been several planned and unplanned plant outages, particularly affecting the poyolefins sector. Despite the production cutbacks and plant outages there is still enough material across all polymer classes to meet demand.
Attacks on commercial shipping in the Red Sea is leading to late arrival of cargo from Asia and rising freight rates.
A summary of the latest supply-related market developments is below;
- Versalis is in the process of restarting several polyethylene plants at its southern Italian site at Brindisi. The plants were shut down following an explosion at an ethylene pipeline and subsequent fire Nov. 13.
- ExxonMobil has halted operations at a French production facility in Notre-Dame-de-Gravenchon, and because the company initiated flaring activities there on Dec. 11, the stoppage has likely included the cracker.
- JBF Global Europe announced the temporary shut down of one of its PET plants at Geel in Belgium in October and the company subsequently announced that the second line would cease production in November due to economic reasons.
- Ineos plans to cease operations at the smaller and older of its two production lines for terephthalic acid (PTA) at Geel, Belgium citing high costs, and added that production in Europe is not competitive with imports from Asia.
Weak demand
Demand more or less collapsed in the run-up to Christmas and has barely recovered at the start of the new year. There is a small upturn in January sales for PE, but for most classes demand remains well below what would normally be expected for the time of year.
No major price movements are expected over the second half of January as most supply agreements were settled early in the month. As upstream costs have remained fairly stable over the last month or so, cost pressure on polymer prices is likely to be minimal next month. The attacks on shipping in the Red Sea leading to longer lead times and rising freight rates may support firmer Asian polymer prices.
LDPE, LLDPE
L/LDPE prices fell further in December after another reduction in upstream costs. LLDPE prices fell by €50 per tonne with LDPE film prices down by €30 per tonne, compared with the €30 per tonne fall for the ethylene contract price.
The LLDPE and LDPE market was well supplied in December, despite production cutbacks. Converters ran down stocks towards year-end and ordered just enough material to meet their immediate production needs, which further reduced the already very low demand.
LLDPE and LDPE prices were stable at the start of the new year following a rollover for the ethylene reference price. There was a modest upturn in demand but buying activity remained well below what would normally be expected. European L/LDPE import prices have risen because of the conflict in the Middle East and disruption to shipping in the Red Sea. European producers continue to operate tight production controls.
HDPE
HDPE prices fell further during December following a reduction of €30 per tonne in the cost of ethylene. HDPE blow molding and injection molding prices fell by €30 per tonne with blown film prices down by €40 per tonne. The HDPE market was well supplied despite production cutbacks. Converters bought just enough material to meet immediate production needs as the year drew to a close.
HDPE prices also remained unchanged at the beginning of the year after the ethylene reference price settled with a rollover. Demand picked up a little following on from the very weak buying activity during December, but still remained much less than would normally be expected. There is still sufficient material available to meet demand, despite ongoing production cutbacks and higher exports to Turkey. There is unlikely to be any significant price movement during the remainder of the month.
PP
PP prices continued on a downward path in December following a further drop in the propylene contract price. PP prices fell by €30 per tonne across the board, which matched the reduction for the propylene contract price. The PP market was well supplied in December despite the production cutbacks. Buying activity fell sharply from mid-month onward as many converters shut down their plants early ahead of the holiday period.
PP prices remained unchanged during the first two weeks of January after the propylene reference price settled on a rollover. There was more than enough material available to meet demand despite producers keeping a firm lid on run rates. The attacks on shipping in the Red Sea is leading to late arrival of cargo from Asia and raising freight rates. Demand remained subdued at the start of the year.
PVC
In December, base PVC prices fell by €30 per tonne, which represents a steeper price reduction for PVC compared to the proportionate €15 per tonne reduction in PVC production costs due to a fall in the cost of ethylene. PVC compound prices fell by €35-40 per tonne because of lower additive costs. There was more than enough material available to satisfy demand last month despite severe production cutbacks. The short production month further exacerbated the very weak demand position.
PVC prices are being rolled over in January in line with the unchanged cost of ethylene. The demand picture is mixed; packaging sales are good whereas demand from the building trade remains veery weak. There is still sufficient material available to meet demand, despite production cutbacks, although the attacks on shipping in the Red Sea is leading to delays in shipment of PVC from Taiwan to Europe.
PS
In December, polystyrene producers announced a planned price cut of €80-90 per tonne following a reduction of €116 per tonne for the styrene monomer reference price. PS producers managed to hold onto a small part of the cost reduction with general-purpose PS prices down by €110 per tonne.
Supply remained adequate despite reduced run rates and an outage at a PS production plant in Spain. The weak demands situation was further compounded by the short production month and by processors running down stocks.
General-purpose and high impact polystyrene prices remained stable at the start of January. Producers called for a PS price rise of €10 per tonne despite a €5 per tonne reduction for the styrene reference price. Converters were slow to restart their plants after the holidays and there were few signs of restocking taking place. Plenty of material was available despite ongoing production cutbacks.
PET
PET prices fell in December following a reduction of €42 per tonne for the November paraxylene reference price and weak demand. The European PET market is well supplied by imports despite very low run rates and plant shutdowns by local producers. The very weak demand situation prompted many converters to shut down their plants for an extended holiday period.
PET prices started the new year with a rollover despite a reduction of €38/tonne for the December paraxylene contract price. The is also concern among PET players about the disruption to PET imports and the rising cost of logistics as a result of the troubles in the Red Sea. In addition, there is also uncertainty regarding the fate of PTA and PET production at the JBF site in Belgium. Demand has remained subdued at the start of the new year.
