Price Reports January 2016
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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! |
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Articles: January 2016 |
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Standards Thermoplastics |
Standard Thermoplastics January 2016: Widespread declines dominate the picture as 2016 gets underway / Weakness in the oil chains demand its tribute / PE trending long / Additional declines likely in February
PE: Whereas in early January, European PE suppliers were only willing to make small concessions, by mid-month the size of the price cuts has become much more significant. The declines across the oil and petrochemical chains provided the psychological setting for the ensuing price battles. Several large producers readily offered rebates, and the high European price level also attracted imports. The ports in Amsterdam, Rotterdam and Antwerp (ARA) are said to hold high stock levels.
By the end of the month, the price cuts often significantly exceeded the fall in the ethylene reference contract.
Notations will likely continue declining across a broad front in February, too. The ethylene contract was fixed EUR 70/t lower, and buyers insist that at least this decline be factored in. In view of the largely good and secure supply situation, there could even be room for further declines. As spring draws closer, the market is increasingly trending towards oversupply. New export-oriented plants in Mexico, Egypt, Saudi Arabia and the United Arab Emirates are preparing to push commercial quantities on to the market. Aside from that, Iran is about to make a comeback as a direct supplier.
Please note: This report introduces two new ranges for HDPE pipe grade.
PP: At the beginning of January, the producers were still able to limit rebates to the EUR 50/t decline in the C3 reference contract. However, as oil and petrochemical prices continued pointing downward, buyers' bargaining chances increasingly improved. At the end of the month, the price decline in some cases exceeded suppliers' cost relief. Large accounts got the best deal.
In the compound segment, a large producer’s attempt to implement “structural” changes outside the scope of existing contracts boomeranged. The result was that the terms of the indexed contracts remained in place. This in turn influenced the freely negotiated transactions.
The C3 reference contract for February dropped back by another EUR 60/t and was fixed at EUR 560/t, only slightly above the record low of January 2009. This will definitely push PP notations down a notch and bring the European market further out of sync with North America, where prices are now pointing upward again. The price differential is now approaching EUR 200/t, making exports to North America increasingly interesting for European producers. This could prevent a further deterioration of prices here.
Lower prices could also be on the horizon for compounds, although producers will keep pushing for a decoupling of monomer and polymer prices. Automotive buyers know the lay of the land and are not easily cowed, so that the roar of the tiger about “structural adjustments” will continue to come across for the most part as a soft meow. Producers will have their work cut out for them.
PVC: If there is one thing that is certain it is that European PVC producers in January put up a tough fight to realise their previously announced goal of lifting margins. The market leaders proved to be particularly stubborn. In the end, they succeeded at pocketing a euro or two of the nominal proportionate decline in the ethylene contract, which came to about EUR 13/t. With availability trending long, there was no room for any further gains.
Against this backdrop the price fight will likely enter round two in February, and could intensify following the proportionate EUR 35/t drop in the monthly ethylene contract. This will do little to deter large producers from their goal of adding EUR 50/t to their margins in Q1 this year. All considered, however, it seems likely that notations will decline moderately. Since the cost of olefin-based additives, including modifiers and plasticisers, is also pointing down, the price drop for ready-to-use blends could end up exceeding that of the other materials.
Styrenics: PS was the only grade that bucked the general downtrend brought about by the decline in January’s SM reference contract. At the beginning of the month, some PS suppliers even raised their prices slightly, but during the course of January, improved availability meant notations increasingly trended towards a rollover. EPS prices, on the other hand, took their cue from the lower cost base, even if suppliers at times managed to pocket parts of the cost reduction. The same was true for ABS. European producers’ goal of achieving even more substantial margin improvements stumbled over competition from more favourably priced Asian imports.
Meanwhile, all signs point towards a further downtrend in February. The renewed decline in the SM reference contract – this time by EUR 50/t – will likely pull the entire styrenics chain down with it, not least since PS availability is likely to improve.
PET: Against the backdrop of falling costs and rather muted demand at the onset of the new calendar year, European PET notations also embarked on a much more marked decline than before. PX receded by EUR 40/t, while MEG was fixed EUR 75/t lower. Producers only passed on part of the cost reduction – which came in at EUR 40-50/t. By comparison, the declines for small- and medium-sized lots came to an average of EUR 35/t. Availability remained long, as many processors speculated on additional price declines following the rather customary weak start to the new year.
Looking ahead, it appears quite likely that notations will decline at least moderately in February. Costs continue pointing down, availability is long, and demand will likely return to more normal levels. Some processors will probably start to build up their inventories again now that the winter slump is ending.
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 2016: Notations remain comparatively weak / Hopes for slide at the beginning of the new year quashed / Many quarterly agreements still being negotiated / Ongoing downtrend
Although the European market for engineering thermoplastics remained weak in January, prices were still at a reasonably high level. Since many long-term deals for the more common materials, including PC and the polyamides, are still being negotiated, the monthly agreements are lacking the direction provided by these quarterly contracts. As a result, price corrections ended up being comparatively small. Whereas POM remained stable, the long period of calm for PBT ended and notations began to slide. PMMA also continued to erode. The commodity-related ABS (see PIEWeb of 03.02.2016) and PP compounds (see PIEWeb of 03.02.2016) followed the slide in the petrochemical upstream.
As the month wore on, many customers became increasingly reluctant to buy some of the grades covered in this report. The decline in oil notations appears to have given them reason to hope for further price cuts. Notations are expected to respond to this trend in February. If the concessions are deemed good enough, there could be brief bursts of business – not least since some converters might then start replenishing their stocks. In other cases, the fact that quarterly agreements have yet to be fixed will also set the pace. In the case of POM, the pressure exerted by imports is rising.
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!
In January the price curve pointed down for both of the reported MDI grades as well as for TDI. The average rebates were relatively moderate, however. The quarterly contract notations for large consumers nevertheless fell well below the level of the final quarter of 2015. Both polyol grades remained stable, for the most part caught in a weak rollover.
Availability was ample in view of the rather modest demand, in particular for TDI, which once again appears to be headed for a surplus in the coming months. Demand from the automotive sector was relatively slack as several players had not yet returned from their extended holiday break.
If benzene loses any more ground before the end of January, MDI will most likely weaken further. Solely the soft demand could offer a certain counterweight, although it is unlikely to be substantial. Developments in toluene and TDI will likely be similar. With orders picking up, polyols should remain stable at least over the next few weeks.
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!
The market for composite materials was extremely lively at the beginning of the year. Notations for both standard and higher-end ortho resin grades once again lost slight ground. By contrast, most manufacturers of glass fibre products were able to push through hikes of 4-5%. Not all products were equally affected, however. Buyers of chopped strand mats, for example, largely got by without increases, while even large consumers of direct roving had to pay more.
On the whole, there was not much inventory refilling at the beginning of the year. This may be attributable to what seems to have been weaker than usual demand in the last month of 2015. December is usually the off-season for such products, anyway, but the extended holiday break at automakers – who only returned to work in January – also curbed demand. It seems that converters may have only covered their immediate needs last month. Going forward, they may still seek to avoid much of an inventory build-up. Producers have so far been able to supply without restriction. Glass fibre products are showing a little tightness here and there.
On the back of the continued downslide in prices for principal feedstocks styrene and propylene in January and February, ortho resins could lose a little more ground. If demand picks up, as most likely will be the case, notations could remain relatively stable. At present, it is unclear which direction the market will take, especially as February feedstock spot notations firmed.
In view of the many long-term contracts, glass fibre prices should remain relatively stable at their current level throughout Q1. The widely anticipated decline following the removal of punitive duties on Chinese material, expected for March, will not make its influence felt quickly. Its impact will more likely only be felt in the second half of the year. If the slight tightness in direct roving availability should worsen, notations could rise further and delivery times could lengthen by three to four weeks.
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!
