Price Reports April 2016

The following information is provided by Plastics Information Europe.  For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read entire versions of the following reports, go to www.pieweb.com and sign up for a 48-hour free trial!

Articles:  April 2016

Standards Thermoplastics Engineering Thermoplastics Polyurethane Feedstocks GRP/Composites Standard Recyclate Engineering Recyclate

 

Standard Thermoplastics April 2016: Polyolefins increasingly decouple from declining feedstocks over course of the month/ Styrenics and PET already rising / Significant uptrend indicates market turnaround come May

PE: European PE markets continued to firm over the course of April, driven mostly by increases along the oil chain. While many processors took advantage of the calm surrounding the Easter holidays late in the month to stock up, in a number of important segments, several producers stopped taking orders as early as mid-March. Such moves were not always based on real bottlenecks, but mainly born out of the belief that prices would rise after Easter. In the end, notations ended up in a weak rollover in April.

Every market player was probably aware of the fact that prices would rise in April. It quickly became clear that oil notations would continue to firm and that the ethylene reference price for the first month of Q2 would point clearly upwards. After a lot of haggling, the contract was finally fixed EUR 60/t higher, and thus only slightly exceeded the cost increase indicated by naphtha. Producers’ exaggerated calls for triple-digit increases were simply unrealistic. PE producers, whose operations tend to be integrated, will now want to factor this in to the polymer price. They will likely succeed at recouping the cost increase, with any additional margin improvement a welcome bonus.

PP: At the beginning of March, the European PP market still showed some weakness as the C3 reference contract remained stable. By mid-month at the latest, however, rising notations for oil and naphtha also prompted polymer notations to firm. As a result, producers moved from a rollover to slight increases, supported by dwindling and thus more expensive imports. Supply shortages due to maintenance turnarounds also began to make their influence felt. Whether or not this necessitated closing order books is open to debate – after all, sellers often hold back deliveries when prices start rising, as they stand to get more for their products a month later.

Prices for PP compounds followed the propylene reference contract and thus remained stable.

In May, all price indicators are pointing upward. Triple-digit hikes for standard PP are being talked, driven by the EUR 60/t increase in the propylene reference contract as well as the beginning of several maintenance turnarounds. At present, imports offer no alternatives. This means that polymer prices could rise substantially, exceeding producers’ cost increases. Such a sharp rise for base polymer could also push notations for compounds higher than the change in indexed contracts would warrant.

PVC: All efforts notwithstanding, most European PVC producers in March had to pass on the slight decline in the ethylene cost to their customers. Since demand from the end markets was still rather muted before the Easter holidays, processors’ inventory levels remained high. As a result, the latter were not worried about obtaining material. In addition to the decline in base material costs, blends producers also had to pass on the fall in the price of several additives. Only manufacturers of PVC paste grades were able to hold notations stable, thanks mostly to unexpected exports to eastern Europe.

However, headed into April, the situation has become entirely different. Ethylene is pointing up, and taking PVC base materials and numerous additives along for the ride. In addition, a number of facilities are due to be serviced, and seasonal business will also ramp up demand in April. All this means that producers could be able to achieve their goal of improving margins.

Styrenics: The surprisingly strong EUR 100/t increase in the SM contract notation took styrenics prices on an upward flight in March. Following a round of very tough negotiations, however, most PS and EPS processors were able to resist producers’ calls for passing on the full increase. That being said, suppliers’ bargaining position was strengthened in mid-month, as demand started to rise following the decision by a number of processors to stock up ahead of the widely anticipated uptrend in prices. As a result, producers adopted a much more resolute approach, especially when it came to low-lying notations. By contrast, western European ABS manufacturers from the get-go insisted on obtaining at least the EUR 55/t increase in composite costs. They even added a euro here and there for prices that had previously stood rather low.

Styrenics prices will likely continue rising in April. Driven by higher benzene and ethylene costs, the reference contract was lifted again, this time by EUR 95/t. This latest increase will likely take PS, EPS and ABS to a higher level, too.

PET: The rises along the oil chains gave European PET producers the necessary psychological backing for their calls to lift prices. The main reason for the resulting increase, however, was the situation in Asia – which for years now has played first fiddle when it comes to PET pricing. The fact that demand was starting to pick up in the Far East, where spring is also getting underway, resulted in fewer imports arriving in Europe. In the latter region, demand also began to pick up as the beverage season got underway, and was supported by processors’ perception that notations were bottoming out. The result was that availability continued to tighten as the month wore on. In the final tally, producers were able to improve their margins, although the gains still fell short of the losses they had had to incur in the first two months of 2016.

But the scales could easily tip in their favour in April. Notations for key PET feedstock PX are pointing up, seasonal activity is gearing up a notch and there is no indication that imports will pick up in the near future. All considered, there really is little direction for PET to go in the coming weeks but up. The extent of the hike, however, will depend on the cost mix. A virtual explosion in prices, however, is highly unlikely given that higher notations would inevitably also result in higher run rates at plants in Europe and its immediate environs.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

 

 

 

 

Engineering Thermoplastics March 2016: Notations fall again / Reductions in Q1 agreements factored into monthly transactions / Turnaround seems imminent / Rising feedstock prices have firming impact

The price erosion for the more “classic” materials within the European engineering thermoplastics portfolio continued in March. Most producers granted additional minor concessions in their monthly transactions, with the result that, at the end of the quarter, the reductions incorporated into the Q1 agreements were also reflected in the smaller orders in the distribution business. The exception was PMMA, which rolled over from February. PP compounds notations stabilised (see PIEWeb of 05.04.2016) and the expectations that ABS would rise in the wake of the higher SM contract were also proven correct (see PIEWeb of 05.04.2016).

The polyamide market remained plagued by oversupply, and this was also the case to a certain extent with PBT and POM. Overall, however, there were initial signs that the market is becoming more balanced, with the output limitations introduced by a number of manufacturers starting to have an impact. It took until the end of the month, however, for this effect to show, as demand declined anyway around Easter and thus prevented any bottlenecks. The PC market situation was already much more balanced, and the PMMA front was stable anyway.

In April, prices are expected to stabilise and in some cases could even start to rise, driven by the mounting costs accumulating from higher notations in the oil and petrochemical chains. The price of ABS and PP compounds, for example, will almost certainly rise as a result of their close connection to SM and propylene. The increase in the cost of benzene could indirectly impact PC, another material where initial rises are quite conceivable. As for the polyamides and PBT, notations could stabilise – a development producers could book as an initial partial success. In the case of POM, on the other hand, it remains unclear whether prices will stabilise. It is more clear-cut for PMMA, which will likely continue the sideways movement that all players appear to be content with.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

 

 

 

 

Polyurethane Feedstocks March 2016: Weak rollover and minor declines / Only TDI higher / Demand erodes slightly / Notations likely to gain in April as feedstocks swing upward

In March, TDI, as the lone PU starting material, made an about-turn and unexpectedly pointed higher on the back of tightening supply. Reports of a smaller European plant closing may have exerted somewhat disproportionate pressure here. The other products either saw a weak rollover or continued the downward trend of the past months, if more moderately.

Since mid-March, order activity has begun slackening somewhat. Up to the end of the month, the downward momentum could accelerate a little before demand picks up at the beginning of April. As the market is reasonably long, bottlenecks are not to be expected, however.

Of all PU feedstocks, MDI is likely to show the most stability in April, as demand is relatively weaker. There will still be a few restrictions on TDI supply, which could create some minimal upward pressure, especially as starting material toluene is firming. Polyols could follow the upward path of ethylene and propylene, which are responding to rising crude notations.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

GRP/Composites March 2016: Resins still in holiday mode / Styrene and propylene take broad strides / Hikes likely in April / Glass fibre product notations unchanged

In March, a few high-standing ortho resins notations were corrected downward, but the vast majority were still caught in a rollover, due to the decline in demand ahead of the Easter holidays. The PIE range tended sideways. The EUR 100/t rise in the styrene contract at the beginning of the month put producers on alert but otherwise had no consequences.

The situation is due to change over the course of April, when demand gets back into full swing again after the Easter holidays. In addition to producers’ calls for price increases averaging EUR 80/t to reflect the higher cost of styrene, momentum could arise from the tightening feedstock supply. Numerous maintenance turnarounds already in progress and those that will be added from mid-April will further limit the volume of styrene available to ortho resins producers. Altogether, close to 2m t of capacity will be missing from the market. The only reason this did not play a role in March was because demand in the period leading up to the Easter holidays declined to a corresponding degree.

For April and May, converters will have to brace for a jolt. If at first look it seemed as though producers were asking for too much, the renewed rise in the styrene contract – nearly EUR 200/t within two months – means the supply side may well be able to push through a large part of this cost rise. At the same time, notations for other starting materials are also pointing upward: While maleic acid anhydride could still roll over, phthalic acid anhydride could rise again after a dip in March. The propylene contract (to feed monopropylene glycol) rose by a slight EUR 60/t in April. An extenuating factor in the price forecast is that converters’ inventories are quite empty as demand for their products was relatively weak at the beginning of the year.

Notations for all three glass fibre products covered in this report remained unchanged in March. For April, some niche direct roving products could see a slight upward trend.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

Standard Recyclate March 2016: Prices still going down a bit / Slight aftershock of recent discounts on virgin materials / Stabilisation expected / Recyclers consider increases in the near future

The recent downward trend of recyclate prices loses its momentum. In March, discounts could mostly be seen only for materials reacting rather sensitively to price movements on the primary market. Only rPP could evade this trend: It has already bottomed out because purchase costs did not leave any further leeway for discounts and a certain scarcity is becoming visible on the primary market.

There are indications that prices for other recyclates will stabilise in April, too. Several recyclers are already talking about possible premiums in May, since the price trend also seems to point upwards for primary materials.

Production scrap was generally available in sufficient volumes. In most cases, purchase costs did not decrease further in March.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

Engineering Recyclate March 2016: Only minor price reductions / Feedstocks expected to rise / Upward trend with primary material should stabilise recyclate prices / Early Easter will put a damper on demand

Compared with Q4 2015, the current quarter has seen the market situation calm down significantly. The first half of March again witnessed only marginal price corrections. It was mainly the large buyers from mass markets like automotive that managed to obtain small concessions.

Base material was more than adequately available, and the supply situation even almost earned the description of "plentiful". With the price of the virgin material generally low, the gap to the respective regrind material has dwindled, inducing many producers of the secondary product to sit out the situation. Some of them are replenishing their stocks as sales to their users have slowed down. Apart from that, demand is likely to be dampened further by the approaching Easter holidays.

Despite all this, there are some positive signs for the recyclate producers. The firmer notations in the primary segment could have a stabilising effect on the regrind product. On the other hand, this will not give secondary producers a great deal of leeway, because the previous strong price advantage of recyclate material has lost a significant amount of its attraction in the competition with virgin material.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!