Price Reports Abstract August 2012
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Articles: August 2012 |
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Standards Thermoplastics |
Engineering Recyclate |
Standard Thermoplastics in August 2012: Polyolefin producers regain margins as costs spiral / PVC and styrenics players restricted to passing on higher costs / Supply tight / Further price rises on the horizon.
In August, European standard thermoplastics notations continued the uninterrupted roller coaster ride they have been on for the past few months. Following the spring price peak, margins began to crumble in May and more severely in June. In July, polyolefin producers in particular managed to stem the bleeding, only to face the next steep challenge in August. The turnaround in feedstock prices that began in July helped producers convince their customers of the need to hike prices in August. Discreet hints of further rises in September also did their part to drive home the point. As bottlenecks began to crop up, buyers abandoned any efforts at resisting hikes as well as any thoughts of pre-buying.Against this background, producers' attempts to restore margins to a reasonable level met with considerable success, especially for polyolefins. Across the board, the increases were well above the cost rises of EUR 140/t for ethylene and EUR 120/t for propylene. As usual, any rock-bottom prices were pulled into line, and price levels evened out. For both PVC and styrenics, where the markets were better in balance, producers at most could pass on their higher costs.
Production cuts, maintenance turnarounds and forces majeures at European crackers all did their part to bolster producers’ margins. It was certainly not surging demand that led to market tightness over the classic summer holiday months. Despite one or two signs that the market may be livening up, order volume remained very modest across the standard thermoplastics range.
Toward the end of August, the approach of Hurricane Isaac in the Gulf of Mexico pushed up prices for global oil, gas and refinery products even further. The increases of EUR 125/t and EUR 105/t for ethylene and propylene respectively in September would probably have come about anyway, but fears of hurricane-driven turbulence helped. Although the September benzene price declined by EUR 35/t, the initial styrene monomer (SM) reference price concluded for September shortly before press time was EUR 43/t higher.
Polymer producers naturally want to take advantage of the cost-driving momentum. Hikes of EUR 175-250/t have been announced for polyolefins in September. A substantial chunk of this could well end up in the PE price. The targets set by PP producers look a little shakier, although there is little doubt that the cost increases will be passed on here, too. PVC producers also would like to jump on the moving petrochemical bandwagon. They are setting their targets higher than the cost increases, but success, as so often, could escape them. Styrenics producers, equally determined not to be left behind, could run afoul of end-market buyers' reluctance to contribute to their margin drive.
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 August 2012: Commodity ABS and PP compounds react to higher feedstock prices / Higher-grade materials mostly roll over / Costs continue to rise / Hopes that new VW Golf 7 will stimulate demand.
Supply was mostly well balanced with a slight tendency towards a surplus. Producers responded to the slack holiday sales by implementing production cutbacks or launching maintenance turnarounds earlier than intended. Nevertheless, most deliveries of standard material were executed promptly. A number of players told PIE they were clearly feeling the effects of the summer lull, as orders from the mass car segment were few and far between, especially in southern Europe and France.
Further rises in feedstock prices pushed up September’s contract notations for styrene and propylene by EUR 43/t and EUR 105/t respectively. As a result, heated discussions with customers about upcoming price hikes for ABS and PP compounds are therefore inevitable. With PA, too, statements from major manufacturers about impending price rises are making converters nervous, especially in view of the imminent Q4 negotiations. Many players are already pinning their hopes on the new VW Golf 7, although it may well take a little longer to get going than originally thought. Nevertheless, the new model could well have an influence on the September price rounds for engineering plastics.
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 August 2012: Bottle resins notations rise on higher input costs / Production still on a low flame / Asian imports scarce / Demand livens up / September certain to see further upward price momentum
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 August 2012: Slow holiday demand neutralises cost pressures / MDI and TDI in weak rollover / Flexible polyol notations pointing down / Producers intent on raising prices.
After several months of downward slide, European notations for polyurethane feedstocks firmed during the course of August 2012. Aside from the occasional EUR 20/t rebate at the upper end of PIE’s MDI price range as well as the lower end of TDI, most feedstocks rolled over into August. The same was true of rigid polyols. Flexible polyols were the sole exception, shedding yet another EUR 35/t – about half the amount they had lost in July. This means that producers’ margins had to bear the brunt of the EUR 108/t rise in benzene, which drove MDI prices up, as well as the EUR 96/t rise in propylene and EUR 115/t increase in ethylene oxide, which in turn affected the price calculations for polyols.
Supply was balanced to long. With the market still in holiday mode, both planned and unscheduled MDI limitations had little effect on availability. TDI was plentiful as several plants previously under maintenance were switched on again. There were no problems in polyols supply either.
Demand was in line with the holiday season, with most orders for polymeric MDI and rigid polyols coming from the construction sector. By comparison, orders for polyol used to manufacture middle-sized class vehicles were weak.
The ongoing holiday period notwithstanding, several producers have already called for massive price increases of up to EUR 150/t for MDI and an additional 6% for rigid polyols, arguing that the increase in raw material costs still needs to be compensated in the final month of Q3. They are hoping that – coupled with the seasonal construction business – a renewed pick-up in demand prompted by converters trying to fill their inventories following the holiday break, will lend more weight to their calls. However, as those plants currently being serviced are brought back on stream, overall supply will continue to improve, which means producers might have to settle for less.
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 August 2012: Ortho resins mostly unchanged / Only slight contractions at the lower end / Glass fibre products stable / Demand gathers strength after summer lull.
The PIE price range for medium-reactive ortho resins in August was largely unchanged against July. Only the lower end of the table contracted slightly; in the view of most observers this reflected low-priced accounts being brought up to scratch. With this, the scope for bargain spot deals such as those seen in recent weeks has narrowed to almost nothing.
By contrast, notations for many ortho resins feedstocks firmed. Styrene monomer (SM) added EUR 135/t, more than recouping the ground lost in July. Propylene, up EUR 120/t, also made triple-digit gains. Phthalic anhydride (PA) has contributed much to the stability of resins prices during the slack summer months. Having fallen by EUR 135/t since June, PA prices recovered in August; however, the gain of EUR 53/t failed to bring the notation back to its April peak.
Supply of ortho resins was long, and there were no bottlenecks or delivery delays. With the summer holiday season waning, demand gradually began to pick up again.
Without exception, notations for glass fibre products were unchanged in August. Occasional delivery delays of up to a week were spotted, but these were attributed more to delays in shipping from Asia rather than to production problems.
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 August 2012: Primary market about-face hits rPE / rPP and rPS remain stable / Procurement costs tending higher / Building and agriculture segments lead seasonal rally
Between mid-June and mid-July, prices for primary standard thermoplastics in German-speaking Europe did an about-face and shot upward again. The impact on secondary producers’ procurement costs was quickly felt. Players in this segment, no longer content to see their own prices dwindle, almost unanimously called for a rollover. Subsequently, notations for translucent rLDPE film and rHDPE injection moulding material gained as much as EUR 10/t, while prices for rPP and rHIPS remained flat. Pipe-grade rHDPE lost up to EUR 20/t, reflecting factors peculiar to that market.
Recyclate supply was balanced to long, depending on the neat polymer content. Even if demand was somewhat lower, this did not affect prices, as some recyclers had cut production or closed plants for maintenance. For the most part, deliveries could be made on time. As expected, demand was reduced, due to the summer holidays. However, the August volume decline was only 15% against July.
The persistent upward curve in raw materials prices drove primary market notations significantly higher, starting in the first third of August. Before the beginning of September, recyclers plan to leverage the first wave of price increases for their input material to improve their own pricing. The autumn rally is expected to be driven by the start of the high season in agriculture and building. Even with prices higher, recyclate will still be considerably cheaper than virgin material.
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 Recyclate August 2012: Primary market rally upsets summer lull in secondary sector / Recyclers respond by hiking low-priced material / Base polymer threatened by new wave of price increases / Q3 could come to a turbulent end
Following the primary market’s rapid turnaround between mid-July and mid-August, which saw prices rise again, engineering recyclate players in German-speaking Europe had to be on their toes to keep pace with the rapid developments and take the appropriate action. To prevent the fluctuations in the base polymer costs from getting out of hand, regrinders already took initial precautionary steps to raise recyclate prices.
The brunt of the primary cost surge was felt by recycled ABS as well as lower-priced rPA 6.6 and rPOM grades. The lower end of the PIE range responded with increases of up to EUR 50/t. Recyclers also maintained the course for smaller orders or more specified grades of rPA 6 and rPC/ABS blends, securing an extra EUR 50/t, which was reflected in the upper range of PIE’s bandwidth as well. All other secondary materials were caught by surprise by the market turnaround. Unable to respond in time, they could do no more than carry over July’s prices into August.
Upstream developments already took their toll on the availability of scrap material in July, although there was still enough to go around thanks to the slow holiday business. Although the vacation season also put a damper on demand, orders continued to trickle in. Regrinders were mostly able to supply their customers promptly.
The primary market’s price rally will necessarily raise the cost of production scrap as well. Although regrinders are reluctant to impose increases going into the final month of Q3, their dwindling margins will probably leave them little alternative. Several recyclers have told PIE that they will be asking for higher prices “soon”, but did not indicate the proposed extent. One thing is certain: The last month of Q3 will definitely be marked by turbulence on the price front.
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.
