Price Reports July 2020

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: July 2020
Standards Thermoplastics  Engineering thermoplastics Polyurethane Feedstocks	Composites/GRP Standard Recyclate  Engineering Recyclate

 

 

  Standard thermoplastics July 2020: Increases for polymer notations usually at the level of cost demands / High prices deter processors / Production cutbacks lead to bottlenecks here and there

 

PE: The second major increase in the ethylene reference cost after the significant coronavirus-driven price declines drove polymer notations in Western Europe up. Producers were calling for hikes of up to EUR 100/t but were only successful in isolated cases – and usually when the price was very low beforehand. The increases amounted to EUR 80/t at minimum. A few injection moulding grades and HD materials were the exceptions. Most customer sectors were supplied without major problems, although there were considerable differences in individual producers’ supply capabilities. Nevertheless, there were rare reports of bottlenecks, for example with material from French production. Demand presented a mixed picture again. Customers were put off by the higher prices and producers’ tough negotiation tactics. By the end of July, the fronts had in some cases hardened significantly. Packaging manufacturers said business was generally quiet. This was not only because of the virus pandemic but also due to the uncertainty resulting from the EU tax on non-recyclable plastic packaging that is expected to be imposed. In some cases, catch-up measures from July could still exert an influence on the August prices. Producers will likely push for margin improvements and can be expected to call for hikes of around EUR 40/t. They are not likely to gain support from the purchasing side, which is why it will probably be an accomplishment for producers to merely pass on the cost increase in the holiday month. It seems that some large customers may not manage to attain the originally agreed annual volumes. This could lead to recalculations for end buyers.

 

PP: The EUR 75/t rise in the propylene reference contract for July was not passed on in its entirety in Western Europe, even though a large number of buyers had to pay more. Still, producers’ hopes of improving margins were mostly unfulfilled. Standing supply contracts usually could be filled without problems, even if the ongoing capacity restrictions sometimes led to allocations. Converters from a number of customer industries saw more of an impetus to buy than of late, though for the automotive industry this was less frequently the case. Some of the unexpectedly sharp EUR 27.5/t increase in the August C3 reference will undoubtedly be added to the PP price. Though producers will be looking to improve margins, the subdued demand will likely not allow this. Order activity should be in vacation mode. The high inventory levels seen recently at converters are pointing downward towards normal, but the impetus to buy is still not sufficient.

 

PVC: In Western Europe, increases of up to EUR 60/t were being demanded for PVC base resin at the start of July following the EUR 84/t price hike for ethylene. Converters’ attempts to curb the upward movement were generally unsuccessful, and most contracts settled at slightly more than the pro-rata additional costs. Flexible compounds were also influenced by the rising price of plasticiser. Minor setbacks at a number of European plants led to a slight supply shortage, particularly since the export business was running well and taking volumes off the European market. Although the agreed contract volumes were delivered in all cases, requests for additional quantities were generally rejected. Orders from pipe manufacturers ran at the normal level in most cases, while profile manufacturers were ordering – or at least trying to order – high volumes. The easing of restrictions in Southern Europe had a stimulating effect overall. Demand for roofing membranes and cables for the construction industry was strong, while demand from the automotive sector remained subdued. The EUR 21/t increase in the ethylene cost component for August will doubtless push up the price of PVC base resin again. Demand will return to more of a normal level with the holiday period, however.

 

Styrenics: The full cost transfer of the higher styrene reference contract to the Western European styrenics value chain that suppliers hoped for was almost entirely thwarted by weak demand. A substantial number of price increases could still be pushed through, depending on the prior price level – previously very low notations experienced triple-digit hikes in some cases. Processors were generally deterred by the high price level and mostly resorted to feeding off well-stocked inventories. In August, there is unlikely to be much movement with a lack of stimuli from both the cost and demand sides. High prices and the holiday season continue to dampen demand. The decline in construction activity expected for the second half of 2020 appears to be happening, and the packaging sector will likely also fall short of expectations. Producers should be able to meet the slack demand, but the stock build-up in preparation for maintenance in September is already going full speed and might become an important factor. This could lead to a number of volume allocations. ABS certainly has some scope for price hikes with the continued uptrend in composite costs, as styrene increased EUR 4/t, ACN was up by EUR 23/t and butadiene was EUR 35/t higher. Realising these demands, however, seems rather tricky in a very slack buyer market.

 

PET: In July, the coronavirus crisis set the pace on the European and global PET markets again, even if only as an undercurrent threat at times. Demand remained generally disappointing. For purchases based on the freely negotiated contracts reported on by PIE, suppliers nonetheless managed to hike their prices and recoup slightly increased costs. They were assisted in this by customers’ ongoing need for security, prompting them to give preference to European goods. Production lines in Europe continued to run at good operation rates in most cases. Import offers were rarely taken up. The need for containers for hygiene applications continued to drive parts of the market. Demand for beverage bottles remained weak, however. For August, suppliers are still hoping that firming prices will continue. However, the warning signs of a second Covid-19 wave cannot be overlooked, and regional lockdowns at least are likely. The consumer mood remains correspondingly bleak. Only slight changes can be expected overall, with no major momentum developing from the situation with feedstocks.

 

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 July 2020: PA prices decline despite slight increase in feedstocks / PMMA likely to see distribution war / Slowdown in demand in August / Automotive situation varies across regions

Both polyamide grades were a focus of interest in July. Western European prices for PA 6 and PA 6.6 materials declined, while most other engineering plastics showed little change. Weak demand in combination with the feedstock costs in the benzene chain – which have so far increased only slowly – make the polyamide business difficult, and this is unlikely to change anytime soon. Especially with PA 6.6, which remains very costly, processors are increasingly unwilling to pay a price that exceeds the one from before the ADN supply crisis.

There was also a downtrend with PMMA, where a distribution war between Western and Asian producers seems likely. At the same time, a certain shortage of the feedstock MMA is foreseeable.

Price hikes are hardly conceivable in August despite the higher costs for most feedstocks. Although there are the occasional calls for increases, producers will probably emphasise stability instead. It remains to be seen whether this can be achieved in all cases. The fiercely pursued output restrictions could be nearing their end as the measure seems to have fulfilled its purpose.

Despite a few signals to the contrary, the holiday month is a period of muted stimuli for demand. The situation in the automotive industry – a key customer market – still varies between regions, especially with regard to polyamides. A couple of car factories are running production without the usual company holidays, others are continuing the downtime or even being cut back again due to a second wave of coronavirus infections. This will continue to impact prices.

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 July 2020: Broad upward trend / TDI soars / Demand unusually strong for holiday season / Output cuts now largely in the past

As expected, the price slide for small- and medium-sized polymeric MDI orders in Western Europe not only bottomed out in June, but with increasing demand, notations even pointed slightly to strongly higher. Here and there, prices rolled over. Producers of both polymeric MDI and TDI were able to pass on the EUR 76/t rise in the July benzene contract. Demand for pure MDI, which usually absorbs some of the volume for the polymeric grade, remained below expectations.

Most production facilities were back onstream, although it was unclear at what capacity they were operated. The output cuts have had the intended effect, and rising demand as well – to some extent even in the automotive sector. After lying dormant for weeks, order volume from bedding and upholstery applications exceeded expectations. Automotive remained an exception.

If the contract prices for benzene, ethylene and propylene feedstocks rise further, as expected, notations for polyurethane starting materials will also rise. End-users are not going on their usual summer holiday and thus will have more money to spend for other things.

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 July 2020: Resins make up June's dip / Livelier demand meets summer lull / Producers' hike plans for August unlikely to succeed

As styrene notations rose for the second consecutive month in July, Western European ortho resins prices firmed again, balancing out the small decline seen in June. Literally not buying their suppliers’ pleas for margin improvements, converters were unwilling to pay even more – despite the modest recovery of the market.

Capacity cutbacks and plant shutdowns, part of an attempt to balance inventories, were the order of the day at resins producers in July. Due to the reduced demand, though, all customers could be supplied, sometimes from an inventory backlog.

Going forward, polymer suppliers can be expected to try to push through price increases, in some cases in a drive to improve margins. But due to the expected demand lull during the summer holiday season, this avenue may be closed, no matter how hard producers bargain. The only real chance they have is to pull extremely low notations upward. That inventories will lengthen again in the medium term, when plants move toward full run, will not be to their advantage.

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 June 2020: Recycled LDPE and rPP prices roll over / Further decreases with rHDPE and rPET / Demand remains weak / No upswing expected in the near future

 

In March, all polyethylene recyclate prices in Western Europe yielded, some even significantly, because price pressure from low-cost virgin materials was strong. Recycling companies were again forced to make concessions. Pure grades were less affected in some cases. With a few exceptions, demand remains stuck in the low season, and this will only change slowly. Demand is likely to increase in small steps in the first half of April. A little more momentum is not expected until after Easter.

 

PE film recyclate saw price decreases and is likely to decline further in April. Primary material notations went down significantly due to the rapid cost decline, and the shorter production month is likely to exert additional pressure on prices.

 

Most rHDPE grades, for which the price gap to the virgin materials market is too narrow, are also likely to be hit by the crisis in April. There were already spot market offers with significantly decreased prices for lower-specified primary grades in March, which resulted from panic selling following the recent plummeting in oil prices. Recycled polymers had to follow suit, although domestic scrap materials have to be purchased at a higher price. While recyclers will try to limit the ongoing margin erosion, it is highly unlikely that they will be able to stop it.

 

PET recyclate showed little change due to long-term purchase contracts, despite the further decline in virgin material prices. Purchase costs for clear bottle scrap, for example, increased by EUR 36/t. Due to the desolate margin situation, the rising costs of production scrap are to be absorbed by cutting back production. Any strong effects on recycled PET will probably be additionally cushioned by the start of the beverage season. Therefore, rPET might end up with a rollover. The limited logistics connection to Italy is already causing difficulties – both on the supplier and customer side.

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 July 2020: Prices stabilise further / Decreases only with rPET and rHDPE blow moulding grades / Demand improves slightly / Holiday season to dampen demand in August

Western European prices of standard recyclate gradually stabilised in July after the downtrend of the previous months came to an end. Only rPET and rHDPE blow moulding grades saw prices decline further because of weak demand. Individual special deals for other materials did not coalesce into a trend. For rLDPE natural film grades, the renewed rise in virgin material notations led to slight price hikes.

The relaxation of coronavirus restrictions in large parts of Europe has led to a hesitant increase in demand. Demand for recyclate was stimulated by rising virgin material prices. In the weeks to come, however, demand is likely to be dampened by the peak of the holiday season. Against this background, the scope for price hikes is limited, and notations are likely to move horizontally. However, this does not apply to rPET – here, the downtrend should continue due to subdued 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!