Price Reports Abstract April 2012

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Standard Thermoplastics in April 2012: Order slump shatters polyolefin producers' margin-improvement dreams / PS suppliers pass on cost relief / PVC and EPS make gains / Is a trend reversal on the horizon?

Against the backdrop of lengthening oversupply, at least for some products, prices for west European standard thermoplastics moved predominantly in line with the respective feedstock costs prices in April. Caught off guard by the sluggish order activity, most polymer producers had to bury any hope of margin improvement, or in the case of PVC scale back their expectations.

Cost increases of EUR 40/t for ethylene (C2) and EUR 50/t for propylene (C3) led producers to call for hikes of up to EUR 75/t for polyolefins. With few exceptions, however, converters managed to prune out all but the cost factor. In the firm belief that the building season would pick up significantly after Easter, PVC producers sought rises of EUR 70/t, with one even calling for EUR 125/t. However, due to the poor order volume, notations ended the month on average only EUR 50/t higher. Apart from a small gain for high-impact grades, PS producers had to pass on the EUR 34/t reduction in the cost of styrene monomer (SM). EPS producers successfully won a rollover and thus a small margin improvement.

Due to the high prices and the Easter holidays, overall demand was weaker than initially hoped, so there were no more serious bottlenecks. Altogether, polyolefin producers had to contend with a 30% decline in orders compared with a normal month. Even demand for PVC and EPS, which would usually be enjoying a seasonal boom at this time of year, was extremely slack. Due to the lower-than-expected sales, some PS producers reported significant increases in inventory levels.

The ethylene contract for May shrank by only EUR 20/t or 2%, even though spot prices declined by 4% in April. Equally disappointing was the fall of only EUR 15/t in the propylene contract compared with the EUR 50/t deterioration of spot prices in April. With base naphtha feedstock ending April down 5% against the end of March, nominal cracker margins have crumbled further. Polyolefin suppliers had not presented any goals as this report was completed, but they are likely to do all they can to defend a rollover for PE and PP despite the long supply and slack ordering.

Still hoping for strong seasonal business following their disillusionment last month, PVC producers will try to push through increases of EUR 50/t. The rise of EUR 58/t in the cost of benzene in May is thought likely to also push up the styrene contract reference price and reverse its April decline. Seasonal drivers could enable EPS producers to at least factor in their higher production cost, but surpluses for PS could hinder any such plans.

 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.

Engineering Thermoplastics in April 2012: PC, PA 6 and PBT hit by Q2 price hikes / POM and PMMA in rollover / PP compounds rise slightly / Business surprisingly slack / Surplus tendencies

The wave of increases that pushed up the prices of engineering thermoplastics in western Europe in Q1, first hitting the commodity-related ABS and PP compounds, moved on in April – as expected – to engulf the traditional engineering polymers as well. As Q2 got underway, PC, PA 6 and PBT rose by up to EUR 80/t. Producers' calls for increases of up to EUR 300/t were targeted primarily at longer-running low-priced orders and were thus restricted to the lower echelons of the PIE ranges. Availability of both ABS and PP compounds improved, although the tail end of the enormous Q1 price rise resulted in another small EUR 40/t increase in April. While some PA 6.6, POM and PMMA producers also targeted customers paying ultra-low prices as Q2 began, there was no real recognisable trend.

The sluggish demand due to the bank holidays led to initial signs of oversupply although producers’ measures to cut back output, first implemented in Q4, remained in place. There was no sign of a bottleneck where lower-specified grades were concerned, and even the ongoing surge in demand from the premium automotive segment did not stop converters from reducing their stock levels. The spell of lively ordering activity that had characterised business before Easter was followed by a significant reduction.

The benzene contract hiccupped again in May, rising by EUR 58/t. The effect this will have on feedstocks, including styrene, phenol and bisphenol A – used in the production of numerous engineering thermoplastics – will likely filter down to ABS, PC and PA 6 prices as well. As a result, it appears increasingly likely that more producers will join those who have already announced price increases for the near future. Nevertheless, all these price-hiking endeavours could fail due to sluggish demand. Absent a united producer front, POM could fall victim to the same fate. As far as PP compounds are concerned, the EUR 15/t fall in costs is a good indicator that prices will decline. PBT and PMMA producers, by contrast, could still reap the benefits of seasonal or niche business (including monitors), finding themselves in a better position to hike prices.        

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.


PET April 2012: Notations follow costs downward / Slack ordering swells surplus / Imports livelier / Pressure on packaging resins remains despite firm feedstocks / New plants set to start up in China

As widely expected, European PET prices followed production costs downward in April. In view of the weak demand and the glutted market, producers had no choice but to let their customers share in the cost relief. The result was a price decline of EUR 50-70/t. In southern Europe, where the macro-economy was especially weak, the setback was as much as EUR 80/t. Spot notations also shed plenty of feathers.

Contributing to the PET bearishness, at least in Europe, was the high level of inventories along the market chain. Converters were well-stocked with both preforms and bottles as well as resin acquired earlier in the year. The presence of imports also was a factor.

At the moment, the cost situation appears to be stabilising and a renewed decline does not seem to be in sight. However, the market is showing no signs of livening up, so that price pressure can be expected to continue. What’s more, several new large PET production plants are due to come on stream in China this spring. All of these influences combined could bite a huge hole into PET notations before summer.

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.

Polyurethane feedstocks in April 2012: MDI prices take another step forward / TDI cauldron still bubbling / Polyols swept upward to record heights / Isocyanate supply tighter in May / Notations continue firm

Fuelled by the many maintenance turnarounds and other outages that continue to affect production facilities in Europe and North America, along with higher starting material costs, MDI notations rose by as much as EUR 40/t in April. However, the increases of up to EUR 200/t sought by producers were mostly limited to quarterly contracts. The PIE range widened considerably at the top. TDI was priced about EUR 90/t higher in April compared with March, driven by producers’ attempt at improving margins as well as tightness in the market. No end to the upward momentum is yet in sight. Polyols made only modest gains of EUR 15-25/t in April, reacting to the EUR 40/t rise in propylene costs and the EUR 50/t higher ethylene price.

Supply of MDI and polyols was sufficiently long, despite lively demand. With demand for TDI normal, buyers occasionally experienced bottlenecks.

Production costs for MDI and polyols are likely to move sideways in May, with an easing tendency, while the TDI starting material toluene continues firm. For MDI, maintenance turnarounds and an FM in the US could lead to delivery problems – a situation all too familiar to TDI buyers. Both of the isocyanates could see price rises. Polyols notations are already at record levels, a sideways movement seems the most likely scenario.

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.

Composites/GRP April 2012: Ortho resins and glass fibre stagnate / Demand remains stable at a high level / Glass fibre supply long / Little market movement expected before summer

The two key feedstocks for the medium-reactive ortho resins covered in this report moved in different directions in April. While the styrene monomer (SM) contract gave way by EUR 34/t, propylene added EUR 50/t. With the two price influences balancing each other out, ortho resins notations remained stable at the March level. Pthalic acid anhydride (PA) also gained EUR 50/t but it seems this had already been factored in.

On the whole, there was little noticeable price movement for ortho resins. A few spot transactions were registered but too few to influence the PIE range. Most likely, the trading was triggered by producers’ attempts to maintain their market share.

Demand appears to be good across the composites product spectrum. Despite the Easter holidays, call-offs from the automotive sector held up well in April, and all orders could be filled on time.
Glass fibre prices surely must have bottomed out by now. Further downward movement hardly seems possible without eating away at the substance, as distributors in particular have told PIE. Prices for roving and mats as well as the cut glass that PIE has not reported on up to now remained stable at last month’s level. Demand from the automotive as well as the building industry was good. One of the few negative factors included a doubling or tripling of freight costs from Asia, where most of the standard material originates.

On the raw materials side, converters have little to complain about other than developments in the titanium dioxide (TiO2) market, where prices since the end of 2011 have unexpectedly remained quite stable. Judging by the prevailing calm at the beginning of the second quarter, it seems unlikely that there will be much movement in this composites raw materials market in the run-up to the European summer vacation season. Therefore, the next round of price increases probably can be held off until the beginning of the year's second half. With a few exceptions, deliveries are being made on time, especially as in view of the high prices many converters are buying only what they absolutely need.

Altogether ittle upward momentum is expected for ortho resins in May, especially as most producers are keeping quiet after the last round of hikes at the beginning of April. The May propylene contract was fixed around EUR 15/t lower than in April. At press time, an initial styrene monomer contract had been settled for May, EUR 47/t higher than in April. The feedstock price increase possibly could provide some impetus for resins producers to pursue price hikes, although such a move seems rather unlikely.

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.

Standard recyclate April 2012: Breather from rLDPE film price rises / Slack Easter holiday demand brakes momentum / Capacity cuts for rPE / Tightness drives rPP and HIPS forward / Building season comes to life

The price hikes pushed through by producers of standard recyclate in German-speaking Europe from mid-March to mid-April fell far short of the targeted EUR 50/t. As demand slackened over the Easter holidays, notations for light-coloured rPE film, extrusion and injection moulding grades lost some ground. The other materials saw gains of EUR 10-30/t. At least the less-specified rPE grades were in oversupply during the holiday period while rPP and rHIPS were more in balance.

PE recyclers were mired in a longer than expected order slump between the end of the agricultural film season and the beginning of the building season. However, the early start to the gardening season and the continued robust automotive demand propped up orders for rPP and rPS.

Despite the price weakness in the virgin polymer segment, recyclate suppliers plan at least to try to push through the rest of their targeted hikes, citing higher procurement costs for base materials. The strong start to the building season could lend momentum to their efforts.