Price Reports Abstract July 2012
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Articles: July 2012 |
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Standards Thermoplastics |
Engineering Recyclate |
Standard Thermoplastics in July 2012: Trend turns around despite summer lull / Feedstock cost slide reversed / Polymer price reductions limited / August cost rise will meet slack demand head on.
July began on a startling note for European standard thermoplastics market players. Ethylene (C2) and propylene (C3) both plummeted by EUR 170/t and styrene monomer slipped by EUR 115/t, arousing hopes that polymer prices in July would drop considerably. The run on the cheaper material began even before June ended, and, during the first few days of July, converters tossed all their earlier ordering resistance to the wind. But the buying spree came to an abrupt halt as feedstock costs leapt forward on the back of surging oil prices.Producers who had only just thrown open the doors to their fully stocked warehouses quickly closed them again. At the same time, they hurried to limit the size of the price cuts they had intended to pass on to customers as a result of the previous feedstock reductions and began refusing orders for additional volumes. There were also rumours of higher prices being charged for additional material delivered before the end of July. In parallel, spot prices for polymer began to climb. Overall, however, the prior decline in feedstock prices had been too great to prevent triple-digit reductions being granted for contract polyolefin volumes. In most cases, producers were forced to pass on the combined June/July reductions in full. For PVC and styrenics, the price cuts were generally in the upper double-digit range.
After the first week of July, an oversupply situation turned, as if by magic, into a relatively balanced market with a slight tendency toward a shortage. With the sudden surge in oil and naphtha prices, the market’s perspective changed. Up to then, producers had exported a large chunk of their overproduction or sold it on the open market. The lively trading in the first few days of July relieved even more of the pressure on inventories. Once the demand from converters’ and the end market forecasts had been stilled, however, the pressure to sell declined, and it was business as usual – which, in view of the euro crisis, was not as much as usual.
As foreshadowed by developments upstream, the ethylene and propylene contracts rose significantly in August – by EUR 140/t and EUR 120/t respectively. At press time, producers had not announced any price hikes, although there have been rumours that increases of up to EUR 200/t will be sought. Converters are highly unlikely to accept this. Even with the production cuts, output is likely to be more than adequate to supply the increasingly crisis-shaken Europe during the extended holiday month of August. In many cases, producers could regard just passing through their higher costs as a success, even though they may dream of higher margins.
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 July 2012: ABS, PA and PP feel the effect of June's feedstock slide / PC, PBT and POM stable / PMMA up slightly / Back pressure generated by reversal of feedstock notations / August still stable
Second quarter ordering activity was considerably slower than in Q1, and dropped down yet another notch in the holiday month of July. Not surprisingly, producers were able to supply their customers promptly, and there were even occasional unscheduled spot deliveries. The onset of a new quarter did little to ease the downturn in the automotive business. Converters active in the more export-oriented E&E business, by contrast, added extra shifts due to the high demand.
The clearly audible rolls of thunder on July’s petrochemical spot markets inevitably paved the way for August’s higher contract agreements. Propylene (C3) rose by EUR 120/t, and PP compounds are expected to follow suit. Benzene reached a new all-time high of EUR 1,068/t, which is bound to trigger fresh discussions over PC and PA prices. Shortly before press time, an initial styrene contract was fixed EUR 135/t higher, taking the material to a level of EUR 1,367/t. Following the EUR 75/t increase in butadiene and the widely anticipated hike for ACN, the ABS cost mix is definitely rising. Benzene-related PX will follow the trend, and could also impact the engineering polyester variant of PBT. Solely POM and PMMA still seem fairly quiet where costs are concerned. Generally speaking, the rather sluggish business in the second summer holiday month will probably cushion much of the blow, but the situation could become much more uncomfortable by the end of Q3.
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 July 2012: Notations follow feedstock costs downward / Renewed oil price rise pushes polymer back up / Balanced market is buoyed by pre-buying / Hikes likely in August
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 July 2012: Petrochemical slump pressures polyols / MDI and TDI in strong rollover / Despite lower output, no supply bottlenecks / Demand down slightly / Rising prices upstream drive
In July, the unexpected petrochemical price rally on the stock market increasingly began to cancel out the deep drops seen at the end of June for PU feedstock contract notations. In fact, seasonal influences pushed polymeric MDI upward by EUR 25/t. As pure MDI lost some ground, the triple-digit premium of pure over polymeric shrank to EUR 85/t. At the rather heterogenous bottom end of the TDI range, producers brought price "laggards" into line at the beginning of Q3, lifting the overall level by EUR 10/t. The average decline of around EUR 75/t for flexible polyols reflected part of the EUR 136/t plunge in the propylene oxide price. In contrast, the EUR 25/t rebate conceded by producers for rigid polyols was virtually nothing considering the dramatic nose dive in olefin notations.
Although quite a number of PU raw materials plants were offline for maintenance or running at reduced capacity, the slacker European summer holiday demand – driven by orders of MDI and rigid polyols for insulation – could easily be met. Demand from the other applications was normal to weak, with regional differences.
The 10-15% rise in global petrochemical prices has put the entire production chain under pressure. The usually quiet month of August could see notations move sideways, although there is no guarantee that this will be the case. In September, the picture could change and market players might well brace themselves for a rough ride.
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 July 2012: Ortho resins prices point slightly downward / Glass fibre stable despite higher transportation costs / Demand seasonally weak / Stability expected in August
Prices of the ortho resins covered by this report tended slightly downward in July on lower starting material costs. Another reason for the price dip – the first since December 2011 – was the soft summer holiday demand, especially in southern Europe, where producers traditionally cut capacity or shut down altogether in July and August.
The styrene monomer reference price gave way by EUR 115/t in July and propylene declined again, for the third consecutive month – this time by EUR 170/t. The phthalic acid anhydride contract was fixed EUR 115/t lower, despite several outages and maintenance turnarounds. Because of the weak demand, the relatively narrow decrease in ortho resins prices of around EUR 15/t – the PIE composites index moved down by 5.5 basis points – does not completely reflect the entire feedstock price decline. Several attempts to lift prices for glass fibre products in June, especially on the part of Chinese producers – most European players did not participate – do not appear to have produced the desired effect. Converters and distributors kept a worried eye on rising prices for sea freight.
Distributors and producers said business was in line with the season, even if somewhat softer than in recent months. Despite continued weak demand from the automotive industry in much of Europe, OEM suppliers ordered well to meet demand from the US, Japan and China. Demand from the auto industry in the large markets of Germany and the UK, where new car registrations picked up by 3% in June, was surprisingly positive.
The wind energy market was rattled by the news that ailing Danish turbine manufacturer Vestas (Aarhus; www.vestas.com) plans to close its plant at Hohhot in northern China due to weak demand for the 850 kw turbines produced there. The company, which claims to be world’s leader in its field, stressed that it still has confidence in the Chinese market. Nevertheless, many worry that this shutdown could be a harbinger of things to come.
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 July 2012: Bottoming out of primary notations curbs secondary sector rebates / rPS still in stable sideways mode / Renewed petrochemical price rally has recyclers ready to pounce
Price reductions of up to EUR 25/t for rLDPE film and rPP granted by recyclate producers in German-speaking Europe from mid-June to mid-July were only about half as large as a month earlier. Rebates for rHDPE, in particular the EUR 40/t granted for top-end pipe grade, were even smaller. Price concessions for other HDPE recyclate products declined by the same margin as in mid-May/June against mid-April/May, while the numbers for rPS continued moving sideways.
Although secondary materials did benefit from rising primary market prices, many recyclers capped production by eliminating shifts or moving plants into maintenance mode. Despite the lower output, deliveries could usually be made on time.
Instead of dropping their prices as had been expected, virgin polymer producers announced hikes to compensate for the fresh rise in feedstock costs and stopped taking orders in the second week of July. In the month’s second week, many converters opted to buy the cheaper regrind material.
Many recyclate plants will continue to produce on a low flame going into August, others will produce for stock. Recyclers well understand that firming petrochemical prices could make procurement more costly in the coming weeks. As their margins have been much battered of late it would not be surprising if they pushed for hikes even in the dog days of August.
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 July 2012: Little movement in early summer / Primary market turbulence has scant impact on secondary sector / Demand robust despite holiday period / Prices likely to roll over
The market for engineering plastics recyclate in German-speaking Europe was generally spared the turbulence that rocked the primary sector from mid-June to mid-July. ABS was the only polymer to see a slight decline. One reason for this is that hardly any of the reductions for virgin polymer trickled down to the price of production scrap. What’s more, converters disappointed with the meagre – or non-existent – price cuts on the primary market turned increasingly to recycled engineering resins and rPP compounds, which are often significantly cheaper and offer similar performance properties. This has stoked demand considerably.
Some market players report at least a slight improvement in the availability of production scrap, which is frequently attributed to the slack ordering by southern Europe. Surprisingly, there is little talk of production cutbacks or maintenance turnarounds in this market as demand from buyers in Germany and the neighbouring Benelux countries is proving gratifyingly robust despite the beginning summer holidays.
In the next few weeks, prices are expected to mostly move sideways. Even suppliers of rPP copo compounds, which are under the most pressure from the primary market, are taking a rather nonchalant stance. Just as they did not raise their prices in reaction to last spring’s firming of the primary market, they do not intend to lower them now. For the engineering recyclate market as a whole, signs are that suppliers will achieve their targeted rollover into August.
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.
