Price Reports June 2016

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:  June 2016

Standards Thermoplastics Engineering Thermoplastics Polyurethane Feedstocks GRP/Composites

 

 Standard Thermoplastics June 2016: Most PE grades slide / PP pointing down, too / PVC producers still achieve slight margin gains / Styrenics inching up / PET under pressure / Trends expected to uphold in July as well

PE: In early June, European PE producers had launched calls for hikes of up to EUR 50/t, set against the backdrop of the EUR 25/t increase in the ethylene reference contract. Converters met these demands with utter incomprehension. Supported by those suppliers that were offensively granting rebates, many processors were able to ignore those players seeking hikes.

Order activity often ended up below expectations, meaning buyers actually did not find it difficult to exercise restraint. The reservations became even stronger when the UK voted in favour of "Brexit" – a decision that resulted in immense insecurity. The result was a slide on almost all PE types, which was more pronounced for material competing with imports. Solely EVA managed to escape this trend, as the decline in demand only partially alleviated the overall tightening tendency.

July’s ethylene contract was fixed EUR 10/t higher. Given the experience of the last year, buyers have become increasingly ironic about feedstock price developments. If they are able to lower prices, they will do so – and headed into July this exactly appears to be their strategy.

PP: As June progressed, European PP producers had to gradually give up hope of passing on the full EUR 17.50/t rise in the monthly propylene contract. The market was too well supplied – from a number of sources – and demand was too hesitant. Only the market leader succeeded in standing its ground for some time. Sellers even had to make concessions for injection moulding grades here and there. By contrast, producers of film grade thought the cost rise was sufficient to raise prices.

Even if buyers were able to claw back some of the advantage, producers’ margins were still at the level of what is now the “new normal.” PP compounds saw no movement at all, as the impetus from C3 was not enough to trigger any change in the index. The market continued to be influenced by the discussion about plans to index prices to standard PP rather than C3. The two largest players have been unable to agree on this, as one favours leaving the system as it is.

The discord is likely to persist for some time to come. The July propylene reference contract held steady at EUR 17.50. Producers will be out to recoup the higher cost as well as some of the margin losses suffered in June. The market leader is unwilling to give an inch, but smaller producers and importers with no such inhibitions are undercutting its price. Depending on the level of demand, it is entirely possible that prices levels could erode. That said, notations for some niche PP products could see a slightly upward tick. Compounds can be expected to remain mostly stable.

PVC: Over the course of June, PVC producers found themselves having to compromise on their earlier calls for hikes of EUR 40/t, instead coming closer to the actual cost rise of EUR 12.5/t. That notwithstanding, suppliers of bulk volumes especially were able to realise slight margin gains. These were partly the result of several imbalances in central Europe, including the outage in Kralupy as well as the strikes in France. As for the remaining PVC types contained in this report, the price of unplasticised dry blends and compounds (PVC-U) stood out with disproportional hikes. Notations for titanium dioxide continued to rise, further pressuring prices.

Looking ahead towards July, all signs point towards sideways or slightly upward momentum. Although the monthly ethylene contract rose by only EUR 10/t, PVC-U notations continue being driven up by the increase in titanium dioxide costs. In the end, a lot will depend on how the weather develops. In the case of dry conditions and sunshine, demand from the public works sector will likely pick up, which in turn would strengthen producers’ hand.

Styrenics: Prices for styrenics trended upwards after the July increase of the SM reference contract by EUR +60/t. It quickly became apparent that the increase was rather short-lived as SM spot prices dropped sharply right after the month began. This resulted in a rather large price range in styrenics agreements. Even if some agreements still reached the level of the cost increase in the first days of June, the premiums reduced in the course of the month. PS and ABS prices were particularly under pressure from cheap import goods.

At the beginning of June, it was already clear that the potential for decreases would dominate styrene prices in July. The prospect of falling prices massively impacted demand because processors did not buy more than absolutely necessary. Obviously, this also makes for rather empty stocks.

Demand for styrenics should therefore be very lively in the beginning of July, especially as the SM has decreased by EUR 125/t, providing additional buying incentives. Producers will factor in June's price developments however, passing on only part of July's cost reduction to their customers in many cases. The processors' purchasing behaviour should again depend largely on future price expectations in the second half of the month. The beginning summer holiday season generally had a dampening effect.

PET: The European PET market remains in the grasp of the general global oversupply, and muted demand resulted in a slight decline in prices in June 2016. While some players in southern Europe were able to uphold a rollover, notations in the northwestern part of the continent continued to erode.

Costs trended stable to slightly firm and therefore did not offer any grounds for potential increases. By the end of the month, the UK’s decision to leave the European Union dealt another blow to spot notations especially. Thanks to the fact that a large number of Asian companies and traders have their subsidiaries in the UK, the country plays a more important role in the European PET market than is the case for other polymers. It therefore comes as no surprise that the fall in the pound’s value will result in quite some turbulence. This insecurity only served to reinforce buyers’ already restrained attitude. Even before "Brexit", the bad weather in large parts of northwestern Europe had kept order activity far below producers’ expectations. Demand was slightly better in the southern part of the continent, which in turn had a stabilising effect on prices.

Which way the winds will blow in July is anyone’s guess right now. Availability remains long, and it is unclear when the initial shock over "Brexit" will subside. Apart from that, there is no clear indication of the way in which costs are headed, and the weather remains unpredictable, too. There is no denying that PET prices remain under latent pressure, but it is unclear whether and by how much notations will decline in the end.

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 June 2016: Little movement on the market in general / Minor corrections at best / Mostly business as usual / Despite slight rise in costs, no incentive for hikes in July.

The European market for engineering thermoplastics was predominantly calm in June. Only styrenic copolymers saw a small increase, which was the result of the rise in the cost of SM. For the remaining materials covered in this report, including PP compounds, whatever movement there was tended to be minor in scope. While the price of speciality grades tended to rise, the recent wave of imports led to some skirmishes over the price of PA 6 material located at the lower end of the PIE range. Supply and demand tended to be well balanced, even though the earlier expectations of strong order activity in the long working month of June proved correct.

Following the recent rise in costs, many producers will be seeking small price hikes in July. Their efforts remain rather half-hearted, however, not least since the impulses from the cost front are not yet pressing. Apart from that, the summer holiday-related dip in demand is also working against them. As a result, the engineering thermoplastics front will likely remain mostly calm in July, with potential slight declines for some grades.

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 June 2016: Tight TDI market still dramatic as frantic buying spree inflates prices / Summer holidays could bring relief / Other products firm slightly

The drama unfolding on the TDI market made movements in all other polyurethane feedstock markets look dull. Prices for the other products remained stable or firmed slightly. As had been feared, TDI prices surged again in June, as converters – who did not want to risk running out of material – chose security of supply over a good price. This pushed the PIE price range for TDI upward by an average of almost EUR 200/t, despite only slightly firming toluene prices.

Observers were exceedingly sceptical as to whether this trend would hold up. Some converters expressed doubt that the market was really that tight, suggesting that producers might be knowingly exaggerating. The commissioning of a new large-scale European plant will probably not have an impact on the market before September. In Asia and the US, too, prices have been moving upward.

The current situation on the TDI front is unlikely to ease in July. The trend to stock up will remain pivotal, although the frenzy among PU converters should dissipate slightly. The outlook is for notations to either continue moving slightly upward or gradually reach a plateau.

Both MDI grades as well as polyols ended up in a rollover or a slight increase, with some prices adding EUR 10/t or in rare cases EUR 20/t. Demand and pricing of flexible polyols is being dampened by the tight availability of TDI. In July, demand may well slacken somewhat as the European summer holiday season begins, so that prices are likely to remain stable or see just slight increases.

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!

 

GRP/Composites June 2016: Resins point slightly higher but styrene slip could nip gains / Glass fibre notations soften / Strong demand from automotive and industry applications

 

Price increases for medium reactive ortho resins in June were not as steep as expected. The latest EUR 60/t rise in the contract for main feedstock styrene provided only a slight boost up to mid-month, but in the final tally the resin saw gains of only EUR 10/t. Toward the end of June, styrene spot prices started to soften as several plants emerged from maintenance turnarounds. The strike wave in France did not have significant repercussions for the European market as a whole. Although the automobile sector and industry ordered well, demand altogether was about average for the season.

Amid poor demand and better availability, July’s styrene contract did a double about-face, dropping by EUR 125/t against June. Although the other ortho resin starting materials – phthalic acid anhydride, maleic acid anhydride and propylene – trended stable or only slightly higher, they will not be able to override the massive downslide in SM. Against the backdrop of falling demand in July, ortho resins notations could lose some ground, with buyers in some applications likely to profit more than others.

Glass fibre products were caught in a rollover, but buyers of standard materials, from chopped strand mats to direct roving, profited from cheap spot offers. The slight softening seen at the lower end of the PIE price range appears to be spreading to higher-end products. Rebates can thus be expected at the beginning of the third quarter.

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 June 2016: Notations start pointing down / Only rPP and rPS resist the trend / Muted demand results in high inventory levels / Further erosion expected in July

 

The widely anticipated softening in virgin material prices started pressuring recyclate notations in mid-June already. Solely rPS and some rPP suppliers were able to push through slight price increases, although here, too, the trend will likely turn around in the weeks to come. After all, apart from the widely expected cost decline, several grades are beginning to trend long at a time when demand will likely decline as the summer holiday season gets underway. In the case of rLDPE film natural grades, the decision of several leading German retailers to stop handing out complimentary plastic bags will likely exert additional pressure.

Meanwhile, the level of competition faced by the mostly medium-sized recyclers will likely pick up a notch now that polyolefin giant Borealis has entered the market through its purchase of mtm plastics. The EU’s requirement that recyclate use be increased could prompt a number of other virgin material producers to follow Borealis’ lead.

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!