Price Reports January 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!

Standard Thermoplastics January 2015: Cost declines dictate the extent of polymer price falls / Some producers manage to improve their nominal margins / Downtrend in February / Turnaround possible in mid-month

PE: Although polyethylene producers began the new year by holding on to most of the cost reductions, by mid-month this approach was no longer tenable. Eager to get their share of the EUR 130/t fall in the monthly ethylene contract, converters insisted on price reductions. Most of them, however, failed to secure the full cost decline, and producers thus once again managed to add a few euros to their margins.

This piecemeal approach has allowed PE manufacturers to exploit the steep fall in feedstock costs by improving their margins from anywhere in the range of EUR 15-105/t since October last year. Following the EUR 70/t fall in the C2 contract, prices are likely to decline once again in February. In the meantime, however, oil and naphtha appear to be bottoming out, while consumer optimism is rising. Both developments point to an imminent increase in purchasing activity. As a result, while producers may still grant substantial declines in early February, the size of the concessions will decrease as the month progresses. In fact, prices might just turn around in the second month of 2015.

PP: IEuropean producers of standard PP had to pass on all of their cost relief for propylene in January, with only a few able to achieve marginal gains at the fringes of the PIE range. Expecting further price deterioration in February, converters were reluctant to buy, as a result of which there was plenty of material in the market. The long market was also the result of lower costs, which encouraged producers to run their plants flat out. In transactions for PP compounds, freely negotiated deals paid tribute to the price declines in C3-indexed contracts, moving downward by EUR 80-90/t. Demand was encouragingly strong, market players said, despite the fact that buyers speculating on further deterioration were reluctant to buy.

On the heels of January’s decline in both oil and naptha notations, the propylene contract fell further in February, giving up EUR 80/t. In the meantime, upstream prices have firmed noticeably. It increasingly looks like oil is bottoming at around USD 40-50/t per barrel. This will certainly provide an impetus to buy, especially as end consumers with wallets profiting from cheap prices at the pump will surely be in a buying mood come spring. Depending on the strength of sales volumes, rebates will be somewhat less generous going forward.

PVC: European PVC producers once again had to pass on the proportionate 50% ethylene decline to their customers. The price of ready-to-use compounds and dry blends fell by a similar extent, since additive costs also followed the general downward trend. There were a rising number of reports that producers’ inventories are starting to burst – and not just because it is the off-season.

For several weeks already, many buyers have been holding back on their purchases in the hopes of additional price declines. Nevertheless, most players expect volume sales to improve in February. While prices will likely continue to decline, the fall is expected to be comparatively moderate. There are rising signs that the decline in the oil chains is bottoming out, which, coupled with pre-season stock-up efforts ahead of what promises to be a good consumer and construction season in Europe, could break the downstream's reluctance to buy.

PS: The plunge of EUR 290/t in January’s SM reference contract pulled prices for styrenic polymers sharply downward. The significant cost correction allowed producers scope for margin improvements, which of course varied from product to product. Converters were able to obtain the greatest price relief for EPS insulation material, as the building industry was still in hibernation. Rebates granted to buyers of EPS packaging material grades were smaller. PS and ABS buyers were in somewhat of a bind as supply tightened on the back of maintenance turnarounds or plant outages for the former and slackening imports for the latter.

At the beginning of the month, ordering was lively as many converters had emptied inventories at the end of the year. From mid-month, however, demand began to ebb as sinking SM spot notations signalled that the contract price was likely to decline again in February. Due to the euro’s weakness, the fall in the SM price, at EUR 55/t, was smaller than expected. Nevertheless, the market could see further price reductions, even if brisk demand might again allow producers to hang on to some of their price advantage.

PET: European PET notations continued to fall in January 2015, even if suppliers were able to keep their concessions at a manageable level – especially considering the triple-digit decline in the notation of key feedstock PX as well as the marked decrease in MEG. Notations for the small- and medium-sized orders reflected in the PIE range thus largely remained above the level of EUR 1,000/t. The same cannot be said of bulk volumes, the cost of which has fallen to the level of higher-grade recyclate, and at times can be purchased for less than the secondary material. As a result, recyclers are under rising pressure to consolidate.

The developments of the last few months have seen a few secondary market players fall by the wayside already. Although demand rose slightly as the new year got underway, as several processors strove to top up their inventories, most players held back on their ordering in anticipation of additional declines. This situation could change in February. For one, there are rising signs that the oil and aromatics chains are bottoming out. In addition, from mid-month onwards, PX spot notations have started to firm. And finally, the low oil price is likely to have a positive impact on European consumer behaviour, too. This means processors will no longer have any reason to delay their orders. All this notwithstanding, it looks like PET prices will once again fall in February, albeit only moderately. After that, however, indications are that notations will have bottomed out.

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 January 2015: Price erosion gathers speed / Downtrend most acutely felt by benzene derivatives / POM and PMMA dance to their own tune / Numerous long-term agreements not yet fixed / Potential for further declines

As widely anticipated, the erosion in European engineering thermoplastics prices gathered speed in the first month of 2015. More commodity-like grades, including ABS and PP followed the trend in their respective material classes, shedding up to triple digits. As for the classic engineering materials, their proximity to benzene played a key role. While PA 6 prices proved to be almost as weak as those of PP compounds, the declines registered for PC were double the size of those of the previous months. In the smaller PA 6.6 and PBT markets, the downtrend was more generalizable, and remained comparatively moderate. Methanol-based POM continued to dance to its own tune, as notations largely held stable. By contrast, the tight market drove PMMA prices up once again.

While demand levels cannot be described as bad, the market does appear to be characterised by a certain measure of restraint. In expectation of future price declines, several processors refrained from ordering beyond their actual needs. A number of long-term agreements are still being negotiated, with the contracting partners so far failing to agree on a price. While producers are speculating on the stabilisation in upstream costs, their buyers and the end markets in general are adamant that the massive oil price slide still leaves room for additional declines. The latter will probably play a role in a number of freely negotiated monthly agreements in February. The extent of the decline will depend on the ratio between lower material prices and the widely expected economic effects from the oil price slide. Irrespective of this, demand is likely to pick up.

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 January 2015: All materials except rigid polyols follow feedstocks downward / Demand revives only slowly / Further deterioration expected in February

As the new year began, notations for most polyurethane feedstocks moved clearly downward. Rigid polyols were a notable exception. Losing only EUR 15/t, this product almost saw a rollover. With declines averaging EUR 50-80/t, prices for MDI, TDI and flexible polyols did not deteriorate as sharply as their starting materials. On the whole, supply remained relatively long, mainly because January got off to a slower than usual start.

Further downward potential appears to be on the agenda for February as well, although the descent is unlikely to be as sharp, due to the easing of feedstock declines. While the slow return to normal demand initially will not be strong enough for prices to begin firming again, by the end of the month, this could nevertheless happen. Converters already are refilling inventories.

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 January 2015: Ortho resins crash / Demand picks up / Additional price declines likely / Glass fibre products pointing slightly upward

Notations for medium reactive ortho resins crumbled noticeably in January as predicted, with the extent of the decline depending on the order volume and the product, but none exceeding EUR 130/t. On average, prices fell by EUR 50/t at the lower end of the PIE range and EUR 70/t at the upper end. This was not even close to the price relief producers pocketed from the EUR 290/t slide in January’s styrene contract. Notations for phthalic acid anhydride and maleic acid anhydride held relatively steady.

Both supply and demand were close to the normal level. The automobile and utility vehicle sectors performed comparatively well in January, even though the situation in Russia provided cause for concern – GM recently announced plans to keep its plant in St. Petersburg closed until mid-May. The weather-dependent building industry is still lagging somewhat behind other applications, but on the whole order activity is livening up noticeably. Inventory refilling has not been observed on a major scale, however.

The February reference contract for styrene, the main feedstock for ortho resins, did not lose as much ground as in the preceding months, falling by only EUR 55/t. Propylene, the feedstock for monoethylene glycol, drifted downward by EUR 80/t. This means that the trend for ortho resins is also pointing downward, although not as sharply as in January.

Notations for glass fibre products appeared to firm in January, but not by as much as the 5% forecast in December. Converters faced hikes amounting to less than half that figure.

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 January 2015: Virgin material declines pressure regrind notations / rPE still holding up relatively well / Early January marked by stock replenishing efforts / Additional erosion likely

The decline in virgin material prices took recyclate notations down with it. Solely the less transparent rLDPE grades – the prices of which fell in December already – were largely able to escape the trend. By contrast, HIPS recyclate took a huge plunge, prompted by the significant falls in the primary market. PET recyclers were the only ones able to obtain production scrap at cheaper prices, although this hardly served to improve their margins. “It’s a step in the right direction, but not nearly enough,” one player told PIE.

With virgin material prices expected to continue their descent in the coming weeks, recyclate notations are likely to follow – that is, if the cost of scrap material allows. The widely anticipated seasonal rise in demand could limit the extent of the potential price declines.

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 January 2015: Erosion across a broad front / Primary market declines start having an effect / Many buyers hold back in anticipation of further price reductions / Market generally calm

It took some time, but in January the declines on the virgin engineering thermoplastics market began to have an impact on recyclate prices, too. Although the cost of not all scrap purchases fell, most regrind notations shed about EUR 50/t. The declines were partly the result of the pressure exerted by competing virgin material grades, although the availability of cheap imports also played a role. Supply and demand were appropriate for a post-holiday start to the year. All in all, the secondary market still seems rather unfazed by the turbulence across the oil chains.

Most recyclate prices are expected to decline further in the coming weeks, even if the fact that demand remains robust will probably keep the decreases at a manageable level. This example illustrates only too well that the ongoing decline in the oil chains is largely the result of supply, and not so much demand.

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!