Price Reports Abstract December 2012

Polyurethane feedstocks in December 2012: Weak rollovers dominate the picture / End to building season and automotive slowdown pressure volumes / Firm benzene adds to costs / Hike plans for Q1

By December, producers’ plans to lift prices for polyurethane starting materials in Q4 were just a fading memory. As in the weeks before, notations mostly moved sideways. Weakening tendencies on the market’s fringes were due in part to the arrival of frost that put an end to the building season in western Europe but also to the continued softness of propylene, which put pressure on propylene oxide.

With the exception of TDI, on allocation due to ongoing maintenance turnarounds, the majority of PU starting materials could be supplied promptly. As the turnarounds ended, most plants were occupied with building up inventory. Reflecting the end to the building season, the automotive production slowdown, frosty weather and most buyers trying to draw down inventories at balance sheet preparation time, there were nevertheless no delivery bottlenecks.

In the fourth quarter, most producers achieved nothing of the targeted margin improvement; but they have warned customers that price increases are on the agenda for Q1 2013. Because of the slack activity due to the holiday at the beginning of January and players extending their Christmas break, as well as the slower off-season demand, the chances of success are slim. An exception here could be the longer running supply contracts, where substantial hikes could be pushed through.

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Composites/GRP December 2012: Resins prices unchanged / Direct roving slightly cheaper / End-of-year demand slack as forecast / Hike for matrix materials expected in North America / No movement in Europe

At the end of 2012 there were few changes in the price structure of medium reactive ortho resins or glass fibre reinforcement materials in Europe. A few special offers were spotted but these had no impact on the PIE range. There were likewise only minor movements in December contracts for principal raw materials propylene (feedstock for monopropylene glycol, down EUR 17/t) and styrene (up EUR 15/t) and as a result no impetus for any changes in polymer pricing.

As it was the off season and a short production month, demand was slack. What’s more, customer industries were in the doldrums. In the automotive sector, new car registrations were down by more than 16% in December against November.

The resins market saw the usual refilling after the Christmas and New Year holidays, converters and distributors told PIE. However, most players said they expected a weakening of activity in February.
A similar trend was seen in the glass fibre sector, with the exception of direct roving, where the lower end of the range showed declines significant enough to depress notations of PIE’s Plastixx Composites index.

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 December 2012: Wide price gap to virgin material takes pressure off rLDPE / Few weak spots in rHDPE / Weak rollover for rPP / Rises in primary notations expected for January

In contrast to the usual pattern seen at the end of the year, the reyclate market in German-speaking Europe picked up the signals from the primary sector and began moving sideways. While the momentum in virgin prices mirrored the tight supply situation, the rollover in the rHDPE secondary sector reflected the widening price gap between the two polymer markets and the brisker orders for building film.

The periphery of the rHDPE pipe segment was affected by the lower priced and longer running contract agreements. Notations for rHDPE injection moulding material rolled over without further discussion. The only weak point this month were the coloured blow moulding grades. PP recyclers took advantage of their suppliers’ slight cost reduction for minor skirmishes and managed to push prices downward by about EUR 10/t. Due to the widening price gap to the primary market, rPS easily rolled over.

As a result of reduced demand in the run-up to Christmas, there were no delivery problems in December. The market was also well supplied with input material, although the neater it was the more it cost. PP and PS scrap could be had somewhat cheaper. Most recyclate production facilities operated normally in the third week of December, which lengthened supplies of finished goods to about one and a half weeks. This will be just enough to last until their plants are restarted in January.

The market was surprised by the dynamic ordering of building film as well as the high level of orders from the still intact rHDPE markets of southeastern Europe. By contrast, the mood in the rPP segment was sombre, as orders from the automotive industry went quiet.

Reacting to rumours of triple digit price increases for virgin polymer in January, secondary producers took pains to protect their margins and accounted for the expected higher procurement costs in their own price structure. Any buyer who dared to question this tactic risked not being supplied.