Price Reports Abstract May 2012
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Articles: May 2012 |
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Standards Thermoplastics |
Engineering Recyclate |
Standard Thermoplastics in May 2012: Slipping oil prices pull polymers down / Margin losses on a broad front / Inventories swell as converters cut orders to a minimum / Prices destined to fall again in June?
In view of the exorbitant price increases in the first quarter of this year, it was inevitable the trend would turn around again. Yet most players on the European standard thermoplastics market were still taken by surprise in May when the inevitable did actually happen, perhaps more quickly than expected. Up to now, contract notations for the olefins had reacted only very tentatively to the first dips in the oil and naphtha prices seen at the end of April. Ethylene (C2) was fixed EUR 20/t lower in May than compared with April, and propylene fell by just EUR 15/t. Polyolefin producers’ call for a rollover was little more than a tactical ploy, and it was not long before they were forced to pass on the full cost reductions to buyers of PE and PP.Around mid-month, oil tumbled again, taking notations for petrochemical feedstocks down, too. Converters then put the brakes on ordering in anticipation of significant price reductions, leaving their suppliers with increasingly cramped storage facilities. As a consequence, by month’s end PE producers had cut prices by up to EUR 70/t, while PP came down by EUR 50/t. PVC suppliers had to bid farewell to their hopes of pushing through a rise and be content with a very weak rollover. PS and EPS producers also saw margins shrink as their cost increases of nearly EUR 50/t were only partly compensated by rises of around EUR 20/t. Some prices even rolled over.
Inventories swelled consistently across the board. The many fire sales and the currently very low spot market prices are an indication that producers are gradually running out of storage capacity. In the end markets, the “euro virus” in southern Europe is continuing to spread, as more and more converters cut orders for reasons other than the high price level. Market watchers fear that the global economy could cool even further.
In June, as expected, ethylene and propylene followed closely in the footsteps of the falling oil prices, slipping EUR 120/t and EUR 125/t respectively. For polyolefin suppliers – and to a somewhat lesser extent for PVC producers – it will now be a case of limiting the damage until the end of the month. For converters, the question is, as always, whether prices will bottom out or whether they will continue falling at the beginning of Q3. Styrenics producers are in an equally unenviable position. Yet again, benzene is proving unpredictable. The most important feedstock for styrene, which consistently bucks the trend, rose by EUR 73/t in June – moving in precisely the opposite direction to oil, naphtha and virtually all other feedstocks. Shortly before press time, the first SM contract was fixed at a rollover, a surprising concession to market realities. After all, who wants to be caught between a rock and a hard place, especially when you’re on a summer toboggan ride down a snow-free slope?
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 May 2012: Rising benzene pushes PA 6, PBT, POM and PMMA higher / Most other types stable / Ordering still very sluggish / Aromatic derivatives could well move up again in June
Demand failed to improve in May against April. For normally specified grades, there were no signs of bottlenecks, and some ABS producers even had to slash output to avoid a surplus. PC and POM saw a number of export inquiries. Imports played scarcely a supporting role.
Due to the many bank holidays, converters reduced orders. Making matters worse for their suppliers, many worked from stock as more dark clouds clouded the economic horizon. Demand from premium vehicle manufacturers in northwest Europe remained solid, and the lighting sector continued lively. In contrast, business with white goods and domestic appliances was slack.
Once again, benzene has bucked the petrochemical trend. With all other notations declining, it gained a further EUR 78/t in June, leading nervous PC and PA 6 producers to quickly announce hikes of up to EUR 250/t. PMMA producers, too, will seek rises of EUR 150/t in this final month of Q2. Butadiene and propylene, feedstocks for PA 6 and PP compounds, are moving in the opposite direction. Volatile butadiene plummeted EUR 400/t this month, and the propylene contract tumbled off its springtime peak to land at EUR 125/t. These setbacks are likely to exert pressure downstream.
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 May 2012: European notations tumble downward / Producers' margins move into the red / Euro's weakness depresses demand / Surplus despite production cuts / Price pressure will continue in June
Despite massive capacity cuts and lower imports due to the euro’s weakness, the market was still oversupplied. Converters had sufficient material on hand, and southern Europe’s economic woes did nothing to support demand.
Little improvement to the overall malaise can be expected in June. At press time, feedstock contracts had not yet been fixed.
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 May 2012: MDI in a strong rollover / TDI up by triple-digit figures as supply tightens / Polyols softer / Building season picks up in NWE / Risk of hikes despite sinking costs
The increase of EUR 58/t in May's benzene contract pushed MDI prices as much as EUR 40/t higher. Despite nearly flat toluene, European TDI notations gained even more momentum. Polyols saw slight declines in May as propylene and ethylene were stuck in a weak rollover.
Maintenance turnarounds throughout Europe had a clearly tightening effect on TDI supply. As demand for polymeric MDI was robust, some supply bottlenecks cropped up in northwest Europe (NWE). The many bank holidays in May led demand for flexible polyols to shrink. As expected, demand for rigid grades continued brisk.
Despite the holidays, the tight supply of TDI was absorbed by the market relatively quickly. At least in NWE, seasonal demand for polymeric MDI and rigid polyols was good. The early end to the upholstery and bedding season depressed off-take of flexible polyols.
For the most part, petrochemical raw materials prices pointed downward in May, spawning hopes of sinking notations for PU feedstocks. However, supply bottlenecks for TDI and the upswing in building activity put paid to this idea. If notations fall at all, only buyers of flexible polyols will be the beneficiaries. For the other products there is a latent risk of rising 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.
Composites/GRP May 2012: Ortho resins prices fairly stable / Bottom end of the range moves slightly upward / Glass fibre notations barely changed / First announcements of price increases from mid-year
As expected, the medium-reactive ortho resins covered in this report saw little change in May. Price movements for feedstocks styrene and propylene more or less balanced each other out. While styrene gained EUR 47/t, propylene lost only EUR 15/t, a relatively modest dip, and phthalic acid anhydride was stuck in a rollover. The end result was a contraction at the bottom of the range, which triggered an overall resins price rise of EUR 5/t. With few exceptions, glass fibre prices remained stable.
Even with the many public holidays in May and the summer vacation season approaching, demand held up well across all customer industries, but there was less dynamic in the market compared with April. There was evidence that converters were ordering more cautiously. Those who did order could take deliveries well in time.
In June, most converters and distributors expect trading to continue stable on a high plateau. Due to the somewhat slackening demand, notations are likely to remain flat at the current level. A major blow would be the weakening of the US and Chinese economies. The European market has already been hit by the earthquake in Italy.
For the first time in its composites reporting, PIE is publishing the “Plastixx Composites” index, the latest in a number of market indices. Movements of the individual materials already can be followed online under “Polymer Prices”. The methodology used is the “Paasche Index.” The calculation is obtained using the average west European market prices for ortho resins and glass fibre products, weighted towards west European consumption volumes. The base level is January 2010 with 1,000 points.
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 May 2012: Only minor gains for producers / Buyers' hold-out in primary market influences secondary sector / Persistently high procurement costs meet order slowdown / First plants idled
Once again, producers of standard thermoplastic recyclate – in particular polyolefins – are caught in a trap between sinking primary market prices and input material generated during the high-price phase of the first quarter. Although suppliers of rLDPE may be justified in seeking increases, with primary polymer prices sinking since April on the back of receding petrochemical notations, converters and their customers in the end-markets are holding back in expectation of further downward correction. Primary producers had to drop their prices in the first third of May, while recyclers were still achieving a rollover or slight hikes.
Demand from the building sector did not materialise to the extent expected as spring got under way. Especially for the most common rLDPE film grades a surplus has been shaping up, and this has led recyclate producers in German-speaking Europe to take capacity off stream. Producers of rHDPE already had supply and demand in balance, and supply and demand for rPP and rPS also were well balanced. Led by PE, orders for all polymers used in building remained far below expectations.
As recyclate producers are still having to purchase their input material at the high prices prevailing in the first quarter, they continue to press for the hikes of up to EUR 50/t in Q2, announced at the beginning of April. They are even resorting to artificially shortening supply to achieve their goal. For this reason buyers of recyclate can expect to pay more in June, especially for products at the bottom end of the range.
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 May 2012: rPA 6 and rPC prices rise despite slack bank holiday business / Other grades roll over / Plastic scrap still expensive but more readily available / Despite poor margins, prices likely to roll over at the end of Q2
Following numerous price hikes at the beginning of Q2, recyclers of engineering thermoplastics kept their notations largely unchanged in May. Only rPA 6 and rPC suppliers managed to win back some of the increases in the cost of the primary material by pushing through hikes of up to EUR 50/t. Most other types covered in this report rolled over, although there were small increases for black rPA 6.
Production hours were down in April and May, two months with many bank holidays and bridging days. The slowdown was also evident with regard to demand for recycled compounds. Not counting PA 6, which remains tight, availability of production scrap eased significantly. Most sellers of lower-specified engineering recyclate were able to supply their customers relatively quickly. Nevertheless, the upswing in demand that had failed to materialise in April did not occur in May either. Most orders came from the automotive sector.
The major increases in virgin material prices in Q1 drove the price of production scrap up as well. Still reluctant to pass on any significant proportion of these cost increases, recyclers' margins have become extremely thin. With primary notations stagnant at a high level, production scrap is unlikely to get any cheaper. The only possible exceptions are ABS and standard PP. Faced with such a scenario, recyclers will do their utmost to resist any attempts to lower their prices even further. Although most recyclers told PIE they will accept a rollover in the final month of Q2, they did not exclude the possibility of rises for higher-specified 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.
