In April, European standard thermoplastic prices increased sharply yet again following significantly higher monomer cost settlements. Polyethylene settled in line with the higher cost of ethylene while polypropylene prices were raised by just less than the propylene cost settlement. Polystyrene and PVC price levels increased well above the rise in feedstock costs. Overall, supply is tight while demand has faltered with prices at such high levels.
Low density and linear LDPE prices increased by €200-250 per metric ton, which is in line with the €230/tonne rise in the cost of ethylene. PP prices just failed to match the €225/tonne increase in the propylene contract price following strong buyer resistance.
PS prices increased by more than the €360/tonne rise in the styrene monomer (SM) reference cost. SM production is highly energy intensive. The SM cost spike reflects the sharply rising cost of gas and concerns over its future availability.
PVC prices reached a new record high in April with a gain of €200/tonne, which is well in excess of the proportionate impact of higher ethylene costs on PVC production.
Bottle-grade PET prices registered a further triple-digit rise driven by tight supply and higher feedstock costs.
In April, material availability for PE, PVC, PS and PET remained limited, and, in some instances, customers were put on allocation. Styrene monomer supply has been impacted by the shutdown in Shell’s Moerdijk cracker in the Netherlands and production cutbacks at other cracker plants due to high energy costs. The PP sector was in better balance with most contracts fulfilled. Imports into Europe from Asia were generally lower for most polymer sectors in April as a result of logistics bottlenecks.
A selection of the latest production issues is summarized below;
- Naphthachimie shut down its cracker in Lavéra, France on 13th April following a leak in the supply of seawater for cooling. It is not clear how long the outage will last. The Lavéra cracker is a major supplier of VCM for four French PVC plants and also supports HDPE and PP production at thee site.
- While Kem One lifted force majeure at three S-PVC production lines in France during the first week in April it has subsequently put PVC customers on allocation following the disruption to the ethylene feedstock chain caused by the Naphthachimie cracker shutdown. The disruption in the feedstock chain for ethylene affected Kem One’s production of VCM and EDC.
- Trinseo declared force majeure on its production in Terneuzen, the Netherlands, in early April as a result of technical issues Shell was reported to have shut down the cracker for ethylene, propylene and styrene in Moerdijk, the Netherlands on 23rd March due to technical problems.
- Ineos shut down its paraxylene plant at Geel, Belgium for a one-month planned maintenance program on March 21.
Demand surprisingly held up well in April. There were however signs that concerns about a possible recession and the very high price levels is leading many converters to buy only the bare minimum volumes to meet current production needs. Some sectors are performing better than others, building and construction and household appliances continue to outperform, while ordering from the automotive sector is very low.
In May, crude oil, gas and polymer prices are most likely to rise further due to continued uncertainty caused by the war in Ukraine and tighter supply. Fears of an economic slowdown and the very high prices will likely however continue to weigh on converters’ ordering activity.
Western European standard thermoplastic prices, €/tonne