Price Reports August 2022

The following information is provided by Plastics Information Europe.  For more than 35 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!

  Standard thermoplastics August 2022: Weak demand, reduced production cause market uncertainty / Hoped-for revival in September yet to make appearance / More and more companies fear for their survival

PE: With demand continuing to fall and at best remaining stable, price reductions were seen for all polyethylene types covered by this report. In the vast majority of cases, they were between EUR 100/t and EUR 150/t. At the same time, European producers cut output substantially, but their intention to adjust supply to demand and thus perhaps prop up quotations was thwarted by higher imports. One small exception was HD types, where production was not reduced to such a large extent. Producers are nevertheless still just about managing to adjust output to the weak demand, but whether they will continue to be able to do so is highly questionable. According to PIE information, more and more producers are toying with the idea of releasing customers from agreed contracts because if suppliers have to fulfil them, they will be forced to keep plants in operation that are at present barely economical. Consequently, converters are orienting themselves increasingly toward the spot market. Should demand not improve significantly, the next step for producers would be to shut down their plants, but so far there have been few signs of this happening. Concurrently, more and more converters are reporting mounting recession concerns from the end markets, so they prefer to work from their stocks and, if at all, to buy on a small scale. Some are also implementing austerity programs, including short-time work. This will put further pressure on prices. Despite production cutbacks, markets are unlikely to be undersupplied because any difficulties experienced by European producers will be compensated for by imports. The only exceptions have been LLDPE hexene and octene film types.

PP: Little or nothing has basically changed since the previous month. Producers are still faced with very high fixed costs for production. Numerous converters are thus being offered the opportunity to withdraw from their contract agreements. For the producers, this has the advantage that they can shut down entire production sites as far as possible and run their remaining plants at full capacity. All in all, the mood is deteriorating noticeably. More and more converters are worried about their survival. On the one hand, they are having to keep goods in stock and write off inventories and, on the other hand, the material is weighing down the silos, with end users repeatedly postponing their call-offs. Planning for the long term under these circumstances is impossible. The C3 contract price again fell significantly in September, by EUR 165/t. If the production cutbacks fail to have any effect, it can be firmly assumed that almost the entire price drop for the monomer will be reflected in polymers quotations. The hoped-for revival in September is not yet anywhere to be seen in the order books. On the contrary, converters are even more hesitant to place orders than they have been of late.

PVC: The price drop for base material clearly exceeded the pro-rata reduction for the cost of ethylene. Less expensive base PVC coupled with weak demand resulted in lower prices in excess of the pro-rata decline in C2 costs for all reported grades. Further reductions are also regarded as certain for September. Contracts were well-fulfilled across the board. Fears of a recession increasingly spread among end consumers, however. During the holiday period, converters thus switched to buying only what was strictly necessary. Compounders were still able to adjust their output to the weak demand. Whether they will continue to be successful with this approach remains very much to be seen. Information received by PIE suggests that the production chain is increasingly considering releasing customers from contracts. While they are still obliged to fulfil these, they are also forced to operate plants that can scarcely be run at a profit at present. A case in point: Belgian resin maker Vynova has just announced that it is cutting European output due to low demand and rising production costs. Converters are thus moving more and more to the spot market. The next step to be taken by producers – if there is no significant improvement in demand – is to shut down plants. This could cut deep into the industry. The good business deals that producers have been able to achieve over the past two and a half years are thus a thing of the past.

Styrenics: After the EUR 509/t crash of the styrene reference, it was already clear in early August that prices for styrenics would follow. The discounts for PS, ABS, and EPS ranged from EUR 400/t to EUR 500/t. On the commodity side, there were only marginal impulses from the other ABS cost factors (butadiene up EUR 40/t, ACN down EUR 18/t). Producers tried to avoid passing the discounts on in full, preferring to use increased energy costs as an argument. But they were not always successful. Demand was so weak that there were several order postponements by processors. who were able to handle their – also low – incoming orders from inventory. Processors disagreed on the reason for the low demand: some attributed it to the typical summer lull, while others saw it as the harbinger of an impending recession. September is likely to be the decisive month for many processors: if demand from the end consumer markets remains weak, there is a threat of serious economic damage, not only, but also, for the furniture industry. September also promises to be a disruptive month for producers, especially with the styrene contract for the month fixed EUR 287/t lower. If they are overwhelmed by high production costs, plant shutdowns could become necessary, as was recently the case in Eastern Europe.

PET: The turbulence that has prevailed on the European PET market so far this year continued on into August. European producers started the month expecting rising revenues or at least stable earnings. Their hopes of passing on higher feedstock and energy costs to the market with the aid of production cutbacks, however, were rapidly dealt a blow by low-priced imports. The converters simply leant back and took material from their warehouses to meet the summer demand. Any peaks that arose could be covered at any time by the wide range of available alternatives. Against this backdrop, prices fell rapidly and sharply. In most cases, price reductions were well into the three-digit EUR/t range. After the major shock in August, European producers are having to make further cutbacks in their plant output, despite the considerable number of planned maintenance outages. In the face of skyrocketing energy costs and weak demand, they need to achieve at least stable earnings in September. On the demand side, however, converters are scarcely able to conclude emergency deals in a bid to retain their suppliers. Fears of a slump in demand are ever-present and the liquidity of many companies is no more than a mere trickle following the pandemic, the supply chain disaster, and the Ukraine war. Proceeding on sight would still seem to be the only viable strategy. Either way, the situation for autumn looks threatening.

For more than 35 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 2022: Many prices drop significantly / Imports counteract production cutbacks in Europe / Tough negotiations expected in September with little room for manoeuvre

Producers were mostly unsuccessful in August in their attempts to push through the increases they had targeted. Prices of the majority of the engineering thermoplastics covered by this report fell significantly – especially the types that are dependent on car production. Only with PA 6 natural and PMMA transparent did producers manage to hang on to a rollover.

Both the automotive and the construction sector had to battle with worries of an impending recession. Both customer groups ordered only to a very modest extent. E&E, until recently somewhat more robust, did not fare very much better than the other two previously mentioned sectors in August. Contrary to expectations, there was no sign of any stock-filling activities. The lack of liquidity of many suppliers made the situation even worse.

European production has since largely adapted to the weak demand. Due to the high price level in Europe, however, converters largely tend to favour Asian material. In many cases, imports are keeping the supply situation stable to good.

In September, there is likely to be a mixture of small price reductions and a rollover. The latter could predominate in cases where the negotiating positions have hardened. On the one hand, the producers want to – and must – pass on the increased costs for energy and logistics, and, on the other, the converters can hardly afford to pay any more in view of the declining feedstock prices and poor demand.

For more than 35 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 2022: Slight discounts dominate the field despite expensive primary products / Demand in summer-holiday mode / TDI likely firmer in September due to plant shutdowns

Sharply dropping costs for benzene and depressingly weak demand led to discounts for all reported grades in August. There were higher discounts at the beginning of the month in each case – up to EUR 170/t, depending on the material. As the month progressed, however, quotations became firmer again, with later agreements usually trending towards a rollover. Demand was in summer-holiday mode. With the exception of TDI – all European plants were recently shut down for various reasons – supply was otherwise sufficient to good.

The price of MDI should continue to go downhill in the upcoming weeks. This is indicated by the wait-and-see attitude of processors and falling benzene spot prices. TDI, on the other hand, could trend slightly firmer. With all European plants either in maintenance, throttled or shut down (see PIEWeb of 19.08.2022), news of demands for higher quotations from producers for September hardly comes as a surprise. In some cases, these reached triple-digit levels. However, favourable imports from Asia are likely to have a dampening effect.

Despite the limited European production in some areas, sufficient material is expected to enter the market. At the same time, extended factory holidays in some cases and weak demand from end-consumer markets are to keep ordering activity low.

For more than 35 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 2022: Resin prices signal easing at end of August / Rock-bottom demand especially for cars, construction / More major price cuts coming / Glass trends firmer

Negotiations on European resin prices were concluded quickly at the start of the month, with most ending in a rollover or close to one. However, the sharp August fall in the contract for the main feedstock styrene (down EUR 509/t) and weak demand even sparked some backdated reductions towards the end of the month. Other feedstocks such as phthalic anhydride, maleic anhydride, and polypropylene glycol also trended softer.

Unlike feedstocks and thermoplastics, resin output was not reduced across the board. Despite occasional shutdowns and extensions of maintenance turnarounds, supply generally was ensured at all times. Only for specialities were things sometimes tight.

Weak demand, however, will probably continue as it has been in the past few weeks. Car production, utility vehicles, and the building sector are all at rock bottom. Despite increasing signs of a gradual recovery in ordering activity, producers will still find it difficult to push through targeted increases. Furthermore, feedstock prices are continuing to fall, especially styrene, which is down another EUR 287/t. This will accelerate the softening of quotations seen at the end of August.

Glass fibre pricing seems impervious to producers’ calls for increases and remained in a rollover. In view of the continued rising costs for energy, however, it is unlikely that they will be able to keep this up in September. Although demand is as weak as before, European producers have their backs to the wall – as do converters. Tough negotiations are on the cards.

For more than 35 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 2022: First discounts pop up in a sea of rollovers / PET proves to be the exception / Low demand weighs on prices / Further and more widespread discounts expected

With the exception of PET materials, there are first signs of a trend reversal: in August, the prices of a lot of recyclate grades got stuck in a rollover – despite attempts to transfer higher energy prices. In some instances, quotations were also declining. The latter was true for some LDPE film grades, but mainly for HD injection moulding recyclates and polypropylene.

Discounts were agreed mostly due to low or at least weakening demand, which has now also affected sectors of the construction industry that had previously been quite robust. Also, the sustainability programmes of consumer goods manufacturers have somewhat been able to uphold the status quo for a few packaging grades.

Supply was mostly satisfactory to good, with only light-coloured film grades experiencing minor bottlenecks. Otherwise, there was often enough material to even satisfy special wishes – which, however, hardly anyone articulated.

In the weeks to come, a more pronounced and broad-based decline in prices is to be expected. Eroding virgin material prices and low demand are exerting noticeable pressure on recyclates. The exception – as has been the case recently – is the PET segment, where further increases are likely. Here as well, however, the air is getting thin; the price level can probably not go much higher.

For more than 35 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 2022: Base material desperately short / Weak demand drives prices down / Further substantial reductions likely in September

The lack of material everywhere is – and will remain – the Achilles heel of recyclate production. Only the fact that demand is currently so weak was able to balance things out in August. The few incoming orders could in most cases be met with ease. Only with recyclate from PC and PP did the situation look somewhat better. Nevertheless, the further declining

consumption of virgin material is severely affecting the availability of base material, and recyclers are giving serious thought to what would happen should ordering activity spring back to life again.

The lack of demand, the holiday season, and serious economic concerns again led to small cost reductions. Only few material types managed to escape the trend.

Despite the slight improvement in ordering activity, reclaim companies will find it difficult to hold their prices in September. Prices were simply adjusted too often in the past few months. Especially automotive suppliers increasingly have their backs to the wall and will have to fight for every cent. As a result, the lower prices will stabilise the more the economy slows down. A small glimmer of hope is that car production is seeing first signs of life – nurturing the tenuous hope of a better Q4.

For more than 35 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!