Price Reports May 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:  May 2016

Standards Thermoplastics Engineering Thermoplastics Polyurethane Feedstocks GRP/Composites

 

Standard Thermoplastics May 2016: Numerous producers fail to pass on cost rise / Demand muted as a result  of numerous bank holidays / Buyers hold back / Jine hikes will likely end up being of a moderate nature

PE: However much they tried, most European PE producers were unable in May to pass on the full increase in the ethylene reference price. Depending on the market situation, some hikes did go through – as was the case for select LDPE grades. On the whole, however, the abundance of import alternatives quashed any attempts at increases. Apart from that, demand was rather muted as a result of the many bank holidays and bridging days, which coincided with buyers' tendency to hold back on orders. All considered, most producers ended the month with a small margin loss.

In June, producers will naturally want to turn the situation in their favour and will try to factor in at least the latest rise in the ethylene reference price. Their success will probably be limited to a few specific cases, however, and especially for material linked to French production lines. Taking a wider bird’s eye perspective, all signs currently point towards a rollover in June, despite it being a long working month.

PP: The European PP market showed differentiated developments in May. For lower-end products that compete with imports, producers had difficulties passing along in full even the modest rise in the propylene reference contract. Due to supply limitations linked to the strikes in France, notations for the higher-end copo grades firmed, and in some cases the hikes exceeded the feedstock reference price. Compounds saw little price movement due to the stability of indexed contracts.

In June, most producers will want to pass on the renewed increase in the propylene reference contract but will face rising opposition from their customers. Depending on which way the market moves, price movements in June could be in line with May.

For the compound segment, June will not be a dull month. From July onward, the market leader plans to switch the reference price index for compounds from C3 to standard PP – a move that is causing considerable anxiety in the market. Negotiations this month will reflect this upcoming shift, and it is hard to predict what the outcome will be.

PVC: European PVC base material producers were unable to push through in full their calls for hikes in May. However, the market leader’s stubborn attitude did allow them to make moderate margin gains exceeding the usual 50% proportionate share of the ethylene contract rise. The increase in notations for unplasticised PVC exceeded that of PVC base material, having been propelled by the renewed rise in titanium dioxide costs. The price of flexible blends, by contrast, reflected the increase in matrix material costs, while notations for PVC paste grades took their cue from the ethylene reference contract.

The escalation in the strikes in France at the end of the month has the European PVC front increasingly worried. Europe’s second largest PVC producing country looks poised for significant production downtimes. Given the latest rise in the monthly ethylene contract, albeit of a slightly more moderate nature, and the expectation that demand will pick up in the long production month of June, PVC notations will likely continue pointing up.

Styrenics: PS prices moved sideways in May, following the rollover of the styrene reference contract. EPS prices also largely remained unchanged, even though in the second half of the month weak demand forced producers to make slight concessions here and there. Although ABS prices rose slightly, due to strong competition from Asia the increase rarely made up for the higher composite costs.

Demand for styrenics was dampened by the many bank holidays and bridging days in May and by processors’ hopes for further price reductions in June. However, any expectations of rebates proved illusory. The ongoing strikes in France and the resulting tightening of availability drove SM spot prices up sharply at the end of the month. In the wake of these developments, the SM reference contract for June added EUR 60/t and styrenics prices will most likely follow suit.

PET: The European PET markets constituted a highly divergent picture in May. While the price of both extremely small and very large orders rose slightly, the decline in notations in the Far East actually pulled down regular mid-sized orders across Europe, which are much more susceptible to import alternatives. On the PET recyclate front, the cost of clear, food-contact approved grades followed the earlier increases in virgin material notations.

There is no clear discernible trend for June, making it very difficult to predict which way prices will turn in the coming weeks. On the whole, the market remains structurally oversupplied, even as several brand-new plants have been completed on Europe’s outskirts but have yet to start operations. Apart from that, plenty of material is arriving from Asia. On the other hand, costs continue to point up and June is a month with a lot of working days, promising strong order activity. In this kind of scenario, the old seasonal adage applies: The sunnier it will be in early summer, the higher PET prices will climb.

n Full reports available at www.pieweb.com/233455 (PE), /233456 (PP), /233457 (PVC), /233459 (Styrenics) and /233458 (PET)

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 May 2016: Upturn increasingly palpable / Initial rises already implemented / Quarterly negotiations looming / Cost increases force producers' hands in calling for hikes

The firming of oil and petrochemical prices that first began in April began to impact the European engineering thermoplastics market in May, in the shape of a number of initial price increases. For nearly all types, the higher cost of base materials and additives forced producers’ hands. In the case of flame-retardant grades especially, the switch to halogen-free additives is driving prices up. By contrast, it has become much calmer on the commodity-related materials front. ABS prices rose only slightly (see PIEWeb of 03.06.2016) and in the case of PP compounds, what minor corrections were made were limited to the lower-priced types (see PIEWeb of 03.06.2016).

Nevertheless, producers are far from content with the achievement they have so far gained for traditional engineering polymers. Either the price hikes were not widespread enough or they ended up being marginal. During this month's upcoming – and in some cases already ongoing – quarterly negotiations, the two sides will surely be locked in serious debates. Given that June is a long working month, and will probably see lively demand, the increases for some types will likely end up higher than expected. The renewed rise in the styrene reference contract is putting pressure on ABS. As for PP compounds, the market leader’s decision to renounce the traditional custom of orienting prices to the polypropylene feedstock come July is already the cause of considerable anxiety. As we are entering "virgin territory" in this regard, it is quite difficult to predict how things will turn 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!

 

 

Polyurethane Feedstocks May 2016: Tightness sends TDI through the roof / All other products in slight upwind / Rising demand could drive prices higher in June

In May, notations for all polyurethane feedstocks moved higher, driven by demand dynamics. Stepping out of line, TDI surged forward by EUR 150/t as the market tightened, and many producers put customers on allocation. The rush to nail down supplies almost resulted in a panic, as demand from all market segments firmed substantially despite the many bank holidays.

If demand for TDI picks up in June as expected, fights could even break out as converters scramble for to secure volumes. More price hikes are a given, even if not of the same proportion as those seen recently. In May it was already all but impossible to place top-up orders, and some buyers might not be able to even take delivery of contracted volumes. From the current perspective there is no relief in sight for buyers – that is unless the production facility of a major player does start full operations after a long start-up phase.

Despite the slightly softer benzene contract notation in May, producers of both MDI grades were able to push through hikes of EUR 20-40/t on the basis of the more substantial rise in April’s benzene contract. As usual, large accounts paid nearly EUR 100/t less, but the rate of increase was the same. The slight decline in May’s benzene contract will not give converters sufficient leverage in future price rounds. Producers are likely to seek and gain further increases in June.

Both polyol grades made price gains in May. With an increase of EUR 35/t, rigid polyols rose somewhat more substantially than the flexible grades, which saw hikes of an average EUR 25/t. For higher-end specialities the increases ranged as high as EUR 50/t. Large accounts with quarterly contracts mostly saw a rollover. With a slight tailwind from crude oil and naphtha boosting starting material propylene, a rollover is buyers’ best hope next month. A slight increase is more likely, however.

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 May 2016: Resins continue to firm / Tight styrene could drive notations / Glass fibre products mostly unchanged / Bargains spotted for direct roving

The sharp price rise in April’s notations for key ortho resins feedstocks styrene and propylene also made its influence felt in May, as had been expected. In particular the lower end of the PIE range for medium reactive ortho resins trended firmer, while the upper end remained largely unchanged. On average, prices rose by EUR 20/t to about EUR 1,440/t. In view of the increase in prices for the other two raw materials, maleic acid anhydride and phthalic acid anhydride, this gain was moderate but still remarkable for a month with so many holidays. The short but unexpected outage at a Spanish production facility for phthalic acid anhydride, at a time when demand was strong, drove the price substantially upward.

Notations for the mostly long-term contracts for standard chopped strand mats remained unchanged in May. In contrast, spot offers for direct roving at favourable prices could be seen here and there over the course of the month. This seems to have been mostly standard import material from the Middle East and North Africa. The rebates, which were limited to certain products, resulted in a slight softening of the PIE range’s lower end.

With no bank holidays on the calendar in June, notations for ortho resins will probably firm further. The monthly styrene contract added EUR 60/t after spot prices rose noticeably at the end of May, due to the strikes in France. Many French plants are likely to remain off stream for some time, putting continuous pressure on prices. Notations for ortho resins are thus expected to rise by an average of at least EUR 20/t.

For glass fibre products, the approaching end of the quarter could set the market in motion. With Chinese demand noticeably subdued – among other things reflecting slower sales to the automotive industry – imports of standard material to Europe could swell. This could potentially soften the firm prices seen up to now.

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!