Price Reports August 2015

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: August 2015
Standards Thermoplastics Standard Recyclate Polyurethane Feedstocks	Engineering Recyclate Engineering thermoplastics Composites/GRP

Standard Thermoplastics August 2015: Market picture dominated by all-encompassing declines / Fall in polyolefin notations reaches triple digits / Downtrend expected to gather more steam in September

PE: PE producers did everything they possibly could in August to avoid passing on all of the EUR 70/t reduction in the cost of ethylene. Towards the end of the month, however, they had to yield to the realities of falling oil and petrochemical prices and the mounting influx of imports by granting concessions that were generally a little above the cost reduction. Only with the blow moulding and higher-grade injection moulding types of HDPE, where availability barely improved through imports, were the rises confined to the monomer reduction. Nevertheless, most producers generally managed to hang on to their present record margins.

This did not go unnoticed among converters, which means that the battle for a larger share of the cake will continue in September. It goes without saying that producers will do their utmost to hold the price cuts to this month’s ethylene reduction of EUR 90/t, although they also know that buyers will want more. For the time being, positions are being sounded out, fears of shortages evoked, and the requirements for gaining bonuses reiterated. Once again, genuine shortages are only likely with certain HD grades, where the price cuts will probably remain on a par with the cost reduction. In the majority of cases, however, it looks as though September will see suppliers being forced to grant concessions that are in excess of the cost cuts. Let the poker game begin.

PP: At the beginning of August 2015, PP producers were still doggedly trying to hold off on passing the monomer’s reduction along the line. From the start, however, it seemed clear that this strategy would have to be abandoned at some point. The end-of-month tally showed rebates exceeding the price relief. At the higher end, concessions were greatest. This did little to trim the fat from the margin padding acquired in spring, however. For PP compounds the rebates came automatically through indexed contracts. Non-integrated players using standard PP as a base material could at least leverage the price decline to win back some of their own margin padding but not enough to sustain their business in the long term.

In September, the downhill momentum for PP notations will gather speed, as the monthly propylene reference contract dropped back by EUR 110/t. The margin padding of back-integrated producers is still so thick that they will continue to turn out as much polymer as possible. As European PP notations are currently the world’s highest, they will attract imports like a magnet and lengthen the market considerably. With this as a given, the concessions granted buyers of standard grades could exceed producers’ cost relief. In indexed contracts for compounders, notations will move down accordingly.

PVC: The market calmed down somewhat in August, as expected, even though the negotiations about the proposed decline in PVC notations proved to be quite tough and time-consuming. Producers found it rather difficult to compromise on their margin goals, while processors had to give up their earlier hopes for more encompassing cuts. In the end, the two parties agreed on a compromise solution, with base grades reflecting the overall cost decline. The same was true for E-PVC, although here players were quicker at arriving at a compromise. Rigid PVC blends prices reflected the fall in titanium dioxide notations, while the decline in flexible blends was limited to the fall in matrix material costs.

Notations are expected to continue their decline in September, especially following the EUR 90/t fall in the monthly ethylene contract. Nevertheless, buyers’ hopes for declines exceeding the fall in costs will likely be quashed as demand starts to pick up again. In this scenario, notations in September could once again follow the proportionate feedstock price decline.
Styrenics: In August 2015, styrenics could not buck the downward trend initiated by the EUR 25/t decline in the SM reference contract. Not only the ongoing summer holiday season curbed demand. After the first third of the month, hints of a further deterioration of SM notations left converters with even less inclination to buy. Especially ABS, but also PS prices, slumped under the influence of increasing competition from imports that were redirected to Europe due to weaker prices in east Asia. All these factors combined to broadly drive ABS and PS prices farther downward than producers’ costs, especially in the second half of the month.

For September, further price reductions for styrenics are to be expected following the renewed decline in the SM reference contract, this time by EUR 100/t. The reduction in ABS and PS supply in particular, due to maintenance shutdowns, will offer some price support. Still, producers will not be able to avoid passing on cost reductions to their customers, either in full or in part.

PET: As was to be expected, European PET prices continued their marked downslide in August 2015. In addition to the downward pull exerted by the fall in Asian notations, which had already began in July, the global decline in oil and petrochemical notations also played a part. There were plenty of imports to go around, and the price downslide led many buyers to hold back on their orders – as a result of which the market is once again clearly trending towards a surplus. The cost mix for PET fell by about EUR 90/t and polymer prices dropped by roughly the same amount.

To make matters worse, it is widely expected that European PET prices will continue to crumble in September. Severe insecurity in Asia coupled with a renewed hopelessly oversupplied European market and a rather reserved attitude among buyers are expected to bring notations down further in September.

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 August 2015: Calm predominates in the holiday month / Imports remain subdued / Benzene's dive generates lively discussion / Buyers will want a sizeable share of the reduction / Tough negotiations at the end of Q3

The story of engineering thermoplastics in Europe in August 2015 is quickly told. With the traditional grades, nothing very much happened at all during the calm holiday month, but ABS lost ground because of the falling feedstock prices (see PIEWeb of 02.09.2015), as indeed did the PP compounds (see PIEWeb of 02.09.2015). The only products to see further increases were the highly specific grades of POM.

The switching-off of some assembly lines by the major car manufacturers reduced ordering activity across the entire breadth of the market. On the whole, imports remained very subdued, due partly to the protective duties and partly to the fact that the incentive for Asian suppliers is simply too small at the moment for them to embark on extensive sales activities. As a result, European producers were generally able to keep a firm grip on their continental market.

September, however, will see plenty of discussion even if only in preparation for the new quarter. Aromatics are on the move and benzene, as the key product in this world, plummeted by EUR 260/t, losing a third of its value. Nevertheless, it is debatable whether producers will pass on the cost reductions in September on a broad front. Some buyers should nevertheless be able to obtain at least partial success.

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 August 2015: Isocyanate notations begin to crumble / Polyols slip / Weakness in Asia and slump in oil prices make themselves felt / September likely to bring further falls

So far in August, European sellers of MDI and TDI have been able to limit the price erosion to the peak values in the small business. In the case of the polyols, this succeeded only at the beginning of the month, but as the days passed, the combination of falling olefin notations, declining oil prices and signs of weakness from Asia created so much pressure that sellers were no longer able to hold their price lines.

On the supply side, there were no signs of any significant restrictions. On the other hand, business slowed down on a broad front as expected due to the holiday season, which meant that overall the market situation was at least tending in the direction of a surplus.

As things stand at present, it looks as if there will be significant price reductions for all PU feedstocks in September. The situation in Asia and particularly China, which seems to be weakening, combined with the slump in oil prices, will certainly have an effect on the petrochemical products, both with the olefins (polyols) and even more with the aromatics (isocyanates) that are more closely related to refining operations. In the current market situation, this will inevitably lead to a fall in the cost of the polyurethane feedstocks.

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!

Composites/GRP August 2015: Prices for resins and glass fibre unchanged / Summer holidays curb demand / Resins expected to move upward on feedstocks in September / Supply normal

Due to the pronounced weakness in trading activity in the composites market in August, notations for the medium-reactive ortho resins covered in this report remained unchanged. Price fluctuations such as those seen in July were not observed. The same was true of the glass fibre segment.

In September, the picture is certain to change, as the market catches up with the EUR 210/t decline in the styrene reference price since June and the almost equally sharp fall in the propylene contract. This means that the monthly resins contract will be showing downward momentum over the next several weeks. At the latest in October, at the beginning of the fourth quarter, the downslide should gather momentum. At present there are no signs of any restrictions on production. Little movement is expected in the glass fibre segment.

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 August 2015: Most grades roll over / Only rPET clear points down / Solid demand supports price level / Base material costs remain high / Recyclers eyeing hikes

With demand robust and purchase costs high despite the ongoing holiday season, most recyclers kept their prices at July’s level. Although the top and bottom fringes of some grades were corrected, the only secondary material to experience a clear downtrend was rPET clear – and even here, solely the top end of the PIE range fell slightly. All other recyclates were still caught in the grasp of the preceding primary market tightness, as a result of which demand for secondary material remains relatively high. Although availability of production scrap improved, it still remains quite pricey.

In order to reduce the pressure their margins have been under for months, recyclers are planning substantial price increases in the coming weeks and months. Since demand is likely to rise once the summer holidays end and autumn begins, they will probably succeed at pushing through at least some of their calls.

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 August 2015: Prices roll over across the board / Holiday season dictates supply and demand / Return to normality in the next few weeks / Possible upturn with regrind POM and PC

Recyclate prices did not budge at all in August. In view of the holiday season and the ongoing quarterly agreements, there was no sign of any significant stimulus. Generally speaking, sufficient quantities of base material were available.

With the holiday period coming to an end, the market should return to normal in the coming weeks once the expected topping-up activities have been completed. In the case of rPOM and rPC, the foreseeable price increases for the virgin material will probably trigger discussions on future recyclate prices.

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!