Price Reports December 2014

The following information is provided by Plastics Information Europe. 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.

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Articles: December 2014
Standards Thermoplastics Standard Recyclate Polyurethane Feedstocks	Engineering Recyclate Engineering thermoplastics Composites/GRP

Standard Thermoplastics December 2014: Notations fall across the board / Only PE market trending tight and still relatively firm / Other grades see reductions close to cost declines / January to see additional downturn

PE: All their efforts notwithstanding, December 2014 was a disappointing month for many European polyethylene buyers, as most of them had to accept the fact that producers pocketed a considerable amount of the ethylene cost reduction, and were thus able to improve their margins. Leading the pack were the C4-based LLDPE grades, some of which were even subjected to a few price hikes by mid-month. Although LDPE and HDPE injection moulding grades came under more pressure, producers still managed to pocket part of the cost reduction. Most customers thus fought in vain for a larger slice of the pie.

Headed into January, prices are likely to decline further, especially following the EUR 130/t decline in the monthly C2 contract. The actual size of the cuts will depend on the balance between supply and demand. It still remains to be seen when price cuts will be low enough to stimulate long-term demand? After all, at one point or another both buyers and the end markets will suspect that prices have bottomed out.

After December’s ethylene contract was lowered by yet another EUR 50/t and amid a weak upstream market, prices are sure to remain under pressure until year’s end. Producers are countering this trend by keeping their existing production cutbacks in place. They are also hoping for some sizeable bonus purchases. A further incentive is their thinly veiled threat of potential price hikes in January. It still remains to be seen, however, whether all of this will suffice to overcome customers’ reticence to buy.

PP: In December 2014 European PVC producers once again had to concede defeat in their attempt at lifting their margins to a more acceptable level. With the market well supplied, they were left with little choice but to pass on the proportionate ethylene cost decline. Compounds producers even had to concede more, since the price of olefin-based stabilisers, modifiers and plasticisers also fell. Producers of the rather high-priced PVC pastes also granted their customers the proportionate cost decline.

Amid the ongoing slide in upstream notations, PVC prices are expected to fall significantly in January – even if it is still difficult to predict the full extent. Producers, for their part, are starting the new year with a renewed sense of purpose. Many told PIE they will no longer grant large concessions, adding that they desperately need to improve their margins. In the end, however, their success will depend on how demand develops.

PVC: In December 2014 European PVC producers once again had to concede defeat in their attempt at lifting their margins to a more acceptable level. With the market well supplied, they were left with little choice but to pass on the proportionate ethylene cost decline. Compounds producers even had to concede more, since the price of olefin-based stabilisers, modifiers and plasticisers also fell. Producers of the rather high-priced PVC pastes also granted their customers the proportionate cost decline.

Amid the ongoing slide in upstream notations, PVC prices are expected to fall significantly in January – even if it is still difficult to predict the full extent. Producers, for their part, are starting the new year with a renewed sense of purpose. Many told PIE they will no longer grant large concessions, adding that they desperately need to improve their margins. In the end, however, their success will depend on how demand develops.

PS: European PET prices continued to slide in December 2014, as the decline in November’s PX contract pulled notations down with it. As is often the case at times of significant price declines, the resulting market picture was quite murky. Whereas some converters already had secured rebates in November, others only did so in December. On the whole, the declines averaged about EUR 100/t over the course of the last two months of 2014. North American and Asian PET notations also caved in. The downward trend was evident on the European PET recyclate front, too, even if both virgin and regrind material suppliers were able to raise their margins slightly, as they did not pass on the entire cost decline.

The market is once again trending towards oversupply, as both new European plants and imports are increasingly making themselves felt. In addition, the upstream price declines led many buyers to exercise extreme restraint, as a result of which producers’ inventories continued to swell. The renewed decline in December’s PX contract appears to be pointing the way to additional erosion in January.

PET: European PET prices continued to slide in December 2014, as the decline in November’s PX contract pulled notations down with it. As is often the case at times of significant price declines, the resulting market picture was quite murky. Whereas some converters already had secured rebates in November, others only did so in December. On the whole, the declines averaged about EUR 100/t over the course of the last two months of 2014. North American and Asian PET notations also caved in. The downward trend was evident on the European PET recyclate front, too, even if both virgin and regrind material suppliers were able to raise their margins slightly, as they did not pass on the entire cost decline.

The market is once again trending towards oversupply, as both new European plants and imports are increasingly making themselves felt. In addition, the upstream price declines led many buyers to exercise extreme restraint, as a result of which producers’ inventories continued to swell. The renewed decline in December’s PX contract appears to be pointing the way to additional erosion in January.

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!

PIE Web Standard Thermoplastic Stats December 2014

Engineering Thermoplastics December 2014: Erosion gathers speed / Processors much more insistent about receiving their share of the cost reduction / January benzene contract caves in / All polymer derivatives under pressure

As expected, European engineering thermoplastics prices continued to erode in December, in a process that gathered even further momentum. The pressure from the ongoing decline in upstream prices simply became too great for producers to insist on stability. This was particularly true for benzene derivatives, although prices for the engineering polyester PBT have also started to slip. On the other hand, long-term agreements prevented any major avalanche, affording a protective cushion to producers. As usual, the more commodity-related ABS (see PIEWeb of 06.01.2015) and PP compounds (see PIEWeb of 06.01.2015) were much more attuned to the feedstock cost decline. Not immediately dependent on benzene, POM and PMMA again proved to be the exception, as their prices remained stable.

January is likely to see considerable price cuts. Although a number of long-term transactions have already been agreed at a rollover, the beginning of the new year still marks a turning point, since many agreements are still being negotiated. After January’s benzene contract once again fell drastically, by more than EUR 200/t, converters are sure to step up the pressure significantly to bring down rates for freely negotiated orders, too. Producers will probably have to grant considerable discounts to stimulate sales of aromatics derivatives and PP compounds. POM, on the other hand, is still tending stable, and the tight niche market for PMMA could even turn around and bring price increases.

Polyurethane Feedstocks December 2014: MDI declines slightly / TDI rolls over / Polyols stable / PO tightness eases / More corrections likely / Demand slack at year end

Price declines for MDI in December were relatively modest, despite the continued downswing for starting materials benzene and toluene. TDI remained largely stable, with only a slight downward correction at the lower end of the PIE price range. Despite the significant declines of EUR 25-30/t for MDI, there is room for further deterioration, especially as spot prices for its starting materials gave up more ground as the month progressed. Large consumers already have been able to negotiate more substantial rebates. Polyols showed only minor price adjustments.

The price of most materials will likely decline even further in January. Feedstocks are pointing downward, and it may take some time before demand begins to recover. The fact that many automobile manufacturers have planned production breaks of up to two weeks between Christmas and the New Year will raise the pressure on TDI. In addition, the recent start of the new TDI plant at Bayer MaterialScience in Dormagen / Germany will lengthen the market.

Composites/GRP December 2014: Resins move down on feedstock decline / Glass fibre products unchanged / SM plunge exerts further pressure on ortho resins / Demand reacts to automotive weakness

In December, the medium reactive ortho resins covered in this report had not yet fully factored in the price plunge for styrene. After a setback of EUR 150/t in December, the feedstock nosedived by a further EUR 290/t in January. Against this backdrop, the EUR 35/t decline in resins prices in December will certainly not be all she wrote – especially as the phthalic acid anhydride contract for January plummeted, and the maleic anhydride contract still being negotiated at press time seemed to be pointing sharply downward, too.

Sales volumes were somewhat weak for the season, due mostly to the softness of demand from the automotive industry as the Russian crisis deepened, but also to sluggish orders for utility vehicles. There are few signs that the situation could improve in the near term. As usual, the market for glass fibre products remained largely unchanged in the run-up to year's end. In December, there was as yet no reaction to the additional punitive tariffs imposed by the EU on Chinese products. In view of sinking energy prices, an increase of 5-6%, as expected in November seems rather unlikely.

Standard Recyclate November 2014: Notations caught between high purchasing costs and declining virgin material prices / rPP and rPET continue to plummet / Prices likely to soften across a broad front in December

Declining virgin material prices pressured recyclate notations in November. Both rPP and rPET continued their downward trend, while rLDPE and rHDPE producers were still able to prevent any declines by pointing to their higher purchasing costs. Some of them even managed to obtain slight increases. All in all, however, both rLDPE and rHDPE notations mostly rolled over.

Higher purchasing costs affected the entire recyclate market, as most regrinders were unable to pass on the rise in procurement costs. In the case of PET, by contrast, recyclers did not manage to adjust their costs downward quickly enough. An abundance of virgin material means PET recyclers especially are facing hard times. The rapid margin erosion has already led one player to stop producing altogether.

Recyclers are hoping that their purchasing position will improve towards the end of the year, when many plan to switch off their facilities for maintenance turnarounds – which means production scrap volumes will amass. In fact, the ongoing downward trend on the primary market means scrap costs, too, will have to follow suit.

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Price Reports December 2014

Articles: December 2014

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