Price Reports March 2020
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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: March 2020 |
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Standards Thermoplastics |
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Standard thermoplastics March 2020: Price declines in March cast a shadow / Drastic drops in April feedstock costs throw market out of joint / Demand for food and hygiene products not disappearing
PE: Most producers factored in only part of the EUR 50/t reduction in the cost of C2 in March in order to improve margins, as polymer prices fell by an average of EUR 40/t. Whereas film grades were able to more or less stand their ground, the pressure with the injection moulding materials was higher, especially among distributors and the trade. The strong demand from the pharmaceutical and hygiene sectors for blow-moulded products also kept prices of the HD blow moulding grades stable. Coronavirus-related products were at the centre of focus for buyers, especially those from the food and hygiene sectors. On the other hand, many converters held back on purchasing because they are speculating on a further fall in prices – especially the construction segment. The EUR 200/t drop in the C2 reference for April will lead to considerable price pressure. Although producers will do what they can to limit the reduction in polymer prices to half the C2 reduction, they will probably rarely be successful in view of the overflowing stocks. For some weeks now, consumer demand for materials for the food and hygiene sectors has been booming, but this is likely to normalise a little in the next few days now that the hoarding craze has eased off. To be on the safe side, converters are now trying to spread their material deliveries over several suppliers.
PP: The decline in the propylene reference pulled PP notations downward. Due to the oversupply situation for homopolymer injection moulding grades, rebates granted for large accounts and less specified material exceeded producers’ cost relief, while the tightness for film grade allowed them to make slight margin gains here and there. Notations for compounds remained unchanged as the C3 decline was not strong enough to trigger an index change.
Converters did not exhibit a common buying strategy in the shadow of the coronavirus pandemic. While some players held back on ordering, others sought to nail down potentially needed volumes. April will afford buyers unusual chances to find bargains. The plunge in oil prices and the slacker demand during the Covid-19 outbreak knocked a hefty EUR 175/t off the C3 price. The question is how many converters will seize the opportunity, as many have cut their own output or shut down production lines. Another uncertainty is to what extent producers will be willing to pass on cost reductions and whether they will even want to let go of inventories at such low prices. Amid the pandemic, logistics could also see interruptions.
PVC: With the fall in the ethylene reference, producers’ demands for a price hike for PVC base resin in March essentially came to nothing. Slight increases were only seen in isolated cases, as a function of source and availability. A rollover resulted for the most part. With S-PVC (P), the slight price reductions for plasticiser made themselves felt, while for paste prices, the slump in demand from the automotive sector had more of an impact. In light of the EUR 200/t price drop for ethylene, price reductions are in the cards in April. One key supplier attempted to restrict reductions to EUR 50/t even before the C2 reference for April was published. Whether this proves successful or not remains to be seen. Even if the impact of the coronavirus pandemic has not yet been reflected in the order books for April, this can still happen in the form of cancellations or postponements.
Styrenics: Styrenics prices in Western Europe plummeted following the exceptional EUR 126/t decline in the styrene reference in March, undoing the increases of the two previous months. On the grounds of their eaten-up margins, producers tried to retain part of the cost reduction, with limited success. In the second half of the month, the processors’ purchasing behaviour was more visibly marked by the coronavirus pandemic. Some players did not order more than necessary because they were betting on further decreases, reducing production output due to Covid-19 or simply not wanting to tie up capital in additional inventory during the pandemic. Other market players took the opposite approach and stocked up inventories in order to maintain their supply capacity even if the situation should cut their feedstock supply. The coronavirus crisis also toppled the previous price structure, with the styrene reference for April plummeting by EUR 315/t. This dramatic drop cannot serve as a template for the upcoming price talks, as such a price level would make any polymer production unprofitable. Negotiations will then have to be conducted on a different basis. The market is clearly off the rails.
PET: The global crisis unfolding around the coronavirus pandemic naturally affected the European PET markets too in March 2020. The plunge in oil and petrochemical prices was offset by a short-term surge in demand due to panic buying by consumers, users and processors. In addition, strict border controls and the standstill at China’s ports hampered delivery. Despite this, sufficient material remained available, since warehouses were full to the brim from the previous months. The notations for the regular monthly transactions thus fell somewhat. However, producers’ margins increased since the key feedstock paraxylene underwent a clear fall in February. It was no longer a surprise to see that notations for recycled PET remained stable at a much higher level than the virgin material prices. Demand for rPET would seem to have uncoupled itself almost completely from the market for virgin PET, at least for the time being. Meanwhile, global prices for all products in the oil, gas and petrochemical markets are still in free fall. In April, the surge in stockpiling could quickly fizzle out due to the extensive social and economic standstill. China seems to be returning to normal, while in the US, the crisis is poised to spread dramatically. All the signs are pointing to a fall in PET notations, although coming up with a forecast in these exceptional times is very difficult.
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 March 2020: Most grades roll over / Only polyamides on the decline / Benzene crash to overshadow April / E&E sector could stabilise prices for POM and PBT
With the exception of the natural polyamide grades, which saw continuing erosion, producers were largely able to salvage their respective prices in March – helped by the quarterly agreements. In the case of PA 6, the surplus tendency affecting base resin triggered a downward reaction, while PA 6.6 saw its previously high price crumble again after having a short breather last month. In view of the weak demand, there were few reports of supply problems, particularly as Chinese facilities are resuming operations again.
The enormous slump in prices in the aromatics chain (benzene topped the list with a EUR 400/t plunge) will put a definite end to any hopes producers had of raising prices in April. On the contrary, they will find it difficult to limit the triple-digit reductions – and that against the background of subdued demand. Only POM and PBT could buck the trend since the E&E sector is still ordering at a solid rate in contrast to the automotive industry, which is out for the count.
Instead, there could be attempts to shorten the market through speculative stocking up. Producers hope, should demand pick up again in the second half of 2020, that prices will be somewhat higher. For the first time, they are asking converters to estimate their requirements until the end of this year in order to be able to plan things better.
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 March 2020: First signs of hoarding push isocyanates higher / Polyols' rise strongest in recent memory / Sales to consumer sectors may slow or collapse due to coronavirus
The coronavirus pandemic had little or no influence on March notations for polyurethane foam in Western Europe. Demand for polymeric MDI was relatively strong, and this led to a few bottlenecks here and there, as maintenance turnarounds and production cuts made their influence felt and pushed prices higher. At the same time, the benzene contract was fixed higher at the start of March. In the TDI market segment, the considerably shorter supply pushed notations upward.
A slight trend toward topping up inventories ahead of potential virus-related production shortages supported prices, despite the still sluggish regular demand.
The coronavirus pandemic could impact isocyanates in April. In view of the current situation, it is difficult to see very far into the future, although supply of the consumer-related segments will likely slow or even collapse. As the shutdown of automotive assembly lines only began toward the end of the month, the end tally could well show the technical market segment holding up a little longer.
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 March 2020: Cautious optimism in the market / SM price plunge will pull resin farther downward / Glass fibre unchanged / Cancelled JEC trade fair is a missing catalyst
In mid-March, composites markets in Western Europe began to feel the effects of the coronavirus pandemic. Soft demand and the declining trend in spot notations for styrene pulled ortho resins downward over the course of the month, albeit moderately.
After starting the year on a lively note, activity began to slow noticeably in early March. From mid-month, few orders rolled in from the transport sector, and the other market segments also lagged somewhat behind, though not to the extent expected.
Without a doubt, the EUR 315/t plunge in the reference contract for principal feedstock styrene will have an impact even if the slump is unlikely to shave EUR 100/t off the resins price.
On the whole, the market’s mood is not all bad, even if the automotive and utility vehicle markets have virtually collapsed. The building industry, for example, is ordering next to normal volumes. No supply limitations were spotted in March, either from Italy or China, as initially expected, or from the logistics side.
For the moment, uncertainty has the market in its grip, and most observers don't expect to see much of a change before the end of April.
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 March 2020: Recycled polyolefins yield noticeably / PET supply situation precarious / Demand picks up only slowly / Discounts predominate in March
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!
Engineering recyclate March 2020: Reductions only for recycled polyamide 6.6 GF and polycarbonate / Supply plentiful / Wide-ranging price cuts expected in April / Fall in virgin material prices and coronavirus-related slump in demand
The situation could probably be described as a breeze before the storm. Engineering recyclate prices in Western Europe remained largely stable in March, and the only reductions have been with rPA 6.6 GF and rPC natural grades. Prices of the other types were held up either by the price gap to the virgin material (rABS), insufficient stimulus from the primary market (rPA 6 and rPP compounds), relatively good sales figures (rPA 6.6 natural) or a lack of imports (rPOM).
In the background, however, dark clouds are building. The ominous cocktail of foreseeable cuts in the price of virgin material and the expected collapse in demand through Covid-19-related production outages will presumably be unleashed in April in a storm that will affect prices of all engineering recyclate materials. And that’s not all. It cannot be excluded that the disruptions in the delivery chains caused by the virus pandemic will lead to a long-lasting depression.
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!
