Price Reports January 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. To read entire versions of the following reports, go to www.pieweb.com and sign up for a 48-hour free trial!

Standard Thermoplastics January 2014: Polyolefin producers secure slight margin gains / Upward momentum loses steam as month drags on / PVC and PS costs passed on / PET stagnant / February to see slight price declines

After a lively start to the new year, the momentum that was evident among European polyethylene producers gradually waned during the course of January. Although the cost of ethylene had risen by only EUR 15/t at the beginning of the year, many producers called for hikes of EUR 60-90/t. Initially, they won increases of EUR 40-50/t, but from mid-month, falling oil and naphtha prices put mounting pressure on the ethylene chain. As the month came to an end, most PE producers had to make do with a very modest margin gain. In terms of the market balance, there initially was some cause for concern about the supply situation, but this improved relatively quickly. Cracker output was cranked up due to falling naphtha costs, and this also fired PE production. As the month drew to a close, there were few signs of any bottlenecks despite the feared reductions in imports because of new EU customs duties.

With the ethylene contract reference price in February falling by EUR 40/t, PE prices will naturally also come under pressure. Most sellers will try very hard to push through a rollover, but it is doubtful that they will succeed. With an increasing abundance of material on the market and upstream notations continuing to decline, they will have hard time defending their position.

After the propylene contract added around EUR 20/t in January, PP producers called for hikes of up to EUR 60/t for standard-grade polymer. Early in the month, they realised gains of around EUR 40/t but as the month progressed notations retreated back to the monomer’s rise. This was due to the improvement in the supply situation and the retreat of oil and naphtha prices. At the end of the month, margins had improved only slightly.

PP engineering compounds saw only minor gains. Freely negotiated transactions were heavily under the influence of automotive industry contracts indexed to C3 notations, which moved forward insufficiently to make any significant impression. In February, the propylene contract continued moving sideways, due in part to soaring notations in North America. For this reason, PP product prices are likely to remain stable in February. Standard grades could come under stronger pressure due to developments upstream. All in all, headed into March, the price barometer appears to be pointing downward.

Solid demand allowed European S-PVC base producers to pass on the proportionate rise in ethylene costs. The relatively mild winter weather meant orders continued to roll in. Had the weather been harsher, the month would have been much worse for producers. In the case of rigid PVC blends, the declining cost of whitening agent titanium dioxide compensated for the rising matrix costs, ensuring a rollover. By contrast, marginal hikes in PVC-P compound prices meant the proportional cost rise was passed on. The same was true for E-PVC paste, where the proportionate ethylene rise could largely be recouped.

Following the EUR 40/t fall in February's ethylene contract, the entire PVC chain is coming under pressure. With
producers also feeling the strain of caustic soda prices, this month will likely see a number of tough price battles. With a total of 20 production days, February is an unusually long month this year and it remains to be seen whether producers will manage to push through the EUR 20/t proportionate cost decline.

The rise in the SM contract reference price pulled all styrenic polymers up with it, but producers seeking to improve margins were unsuccessful in passing on more than their higher costs. On a broad front, only PS manufacturers were able to achieve margin gains. In the direct business, ABS producers – but not distributors – were able to add in their higher costs. EPS producers saw their margins deteriorate. Demand levels were in line with the short production month. Many converters only returned to work in the second week of January, and in many cases buying activity did not return to normal until mid-month. The mild weather had a positive influence on EPS insulation grades used in the building sector.

With February's monthly SM reference price up EUR 17/t against January, styrenics prices are likely to continue trending upward, if only slightly. Absent any other influences, notations probably will again move in line with raw materials prices.

In the early days of January, there was talk of the occasional rise in European PET prices, but as the month wore on, the trend was increasingly pointing to a rollover. While North American prices fell slightly, the decline was more pronounced in Asia. Even though producers had cut output rates, poor demand meant there was more than enough material to go around, not least due to imports. On the recyclate front, the cost of both the higher-quality transparent material as well as clear flakes moved sideways. Against the backdrop of slightly rising base material prices, the price of mixed rPET flakes rose slightly.

Structural overcapacities continue to pressure PET prices. With production costs receding, buyers could potentially wring rebates out of their suppliers in February. Looking ahead, the start-up of several new plants later this year means that, by summer, the market can expect to see not only considerable oversupply but also further consolidation.

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!

Engineering Thermoplastics January 2014: Market still shows signs of weakness / Cost rises almost impossible to push through / Renewed leap in benzene contract pressures producers / Prices due to rise

It was a difficult start to the new year for the European market for engineering thermoplastics. Reeling under the pressure of rises in the benzene chain, producers found it almost impossible to pass on the costs. In some instances, the price of classic construction materials even declined – especially in the case of PC and PA 6. All other engineering thermoplastics prices treaded water. In the commodity-related segment, the stability afforded by the many orders tied to C3 prevented a cost rise for PP compounds – even though the price of standard PP did increase. ABS producers also only managed to factor in part of their higher costs.

Global overcapacities continue to characterise many segments, countering the production cuts implemented across Europe. Demand, from the automotive sector especially, is fairly lively; other end-markets, such as E&E and construction, are taking somewhat longer to come out of their starting blocks.

It remains exciting on the benzene front. Following another EUR 61/t rise in February, to a level of EUR 1,055/t, the aromatic has once again captured the high ground. With their backs to the wall amid these rising costs, producers will do everything they can in February to prevent their margins from eroding even further. In so doing, they will also set their sights on the upcoming Q2 price round. It remains to be seen whether they will be successful, especially in view of the fact that the aromatics chain is expected to ease again soon.

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!

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!

Polyurethane Feedstocks January 2014: Producers again unable to pass on higher benzene prices / Demand still subdued, but spring awakening on the horizon / Price hikes increasingly likely

Benzene prices rose by just under EUR 40/t in January; however, as supply exceeded demand, for the second consecutive month MDI producers were unable to pass on all of their higher cost for the key aromatic. In December, notations for the polyurethane feedstock had remained largely stable, despite benzene’s EUR 109/t surge.

By contrast, notations for toluene, the key feedstock for TDI, declined by EUR 14/t in the first month of 2014. In reaction, prices for this PU component moved in two directions – up and down. While starting materials for polyols have added EUR 40/t over the past two months, no significant upswing in polyols prices has been seen.

Markets for polyurethane products are now gradually beginning to awaken from hibernation, and demand is expected to pick up accordingly. This means that price campaigns by producers of PU feedstocks will have a greater chance of success. The expected tightening of C3 supply could lend increasing momentum to polyols notations.

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!

Composites/GRP January 2014: Ortho resins still flat / Slight upward trend expected in February / Glass fibres mostly stable / Rovings now tending somewhat firmer

West European prices for the medium reactive ortho resins covered in this PIE report remained largely unchanged in January. The range contracted in a few cases but despite the slight gains for feedstocks styrene (up EUR 35/t) and propylene (up EUR 20/t), this did not have any major impact on notations. Pricing of maleic acid anhydride and phthalic acid anhydride was flat.

Demand from the automotive sector did not fall off as sharply as usual due to the shortened holiday shutdowns at assembly plants for passenger and utility vehicles. By contrast, ordering by the wind energy sector was relatively slack. Sharp declines in North America and Europe could not be compensated by the continued buoyance of the Chinese market. In Europe, demand from France, Italy and Spain weakened by 24-80% year-on-year. Manufacturers of pre-pregs reported – in some cases substantial – decreases in sales.

Egypt’s Jushi is said to be already exporting commercial volumes of glass fibre products to Europe. No noticeable impact on European price levels has been seen, however.

The only slight rise in the styrene contract (up EUR 17/t) in February is unlikely to have a substantial effect on the price range for ortho resins, although there could be some scope for producers to recoup the margin losses suffered in January. This would impact mostly smaller accounts. In North America, resins prices already have added USD 0.04/lb (EUR 65/t) and some of the hikes could be expected to wash over into Europe with a little delay. Notations for large accounts can be expected to remain stable.

Demand is picking up from all segments of the market. The recreational vehicle market will start to rev its engine soon – unless a sudden onset of winter in mid-February stops it in its tracks.

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 January 2014: Notations increase slightly / Rising virgin material prices pressure / Regrinders face increase in costs / Additional hikes likely / New rPET prices

NEW: Notations for rPET grades
PIE has now begun reporting prices for three PET regrind materials: rPET clear (ready-to-use recyclate for bottles and film), rPET flakes clear (mainly used for film) and rPET flakes coloured (mainly used for straps). As always, PIE prices are sourced both from web-based and personal consultations with market players. The first report follows a prolonged period of trial and discussion.

Amid a surprisingly lively start to 2014, January’s standard recyclate notations all stood under the star of rising prices, albeit of a moderate scale. Yet, not all recyclers were able to make money from the upward trend, which is gaining steam. The upper end of the recyclate price range is feeling the pressure of rising virgin material prices, a trend dating back to early December and which has already resulted in output adjustments. Another factor is the increasing cost of higher quality production scrap. The twin pressures have seen notations of higher-quality recyclate climb upwards by EUR 10-20/t.

However, the current situation will be further compounded in the coming weeks by the fact that under a new law, which has gone into effect as of January, many German recyclers now have to make do without the renewable energy (EEG) subsidy they previously received. With their backs against the wall, most of them will have no choice but to push for a price increase of up to EUR 40/t. Failure to obtain it could sound the death knell for quite a number of recyclers. Indeed, the situation in Germany could potentially end in disaster.

As hikes have become of existential nature for German recyclers, it is quite likely recyclate notations are going to increase. What remains unclear is whether other European competitors - who are not exactly in the best of positions either – are going to try and exploit the situation to undermine competition, or use it to grease their own margins. In the end, it is probably going to be a mixture of both. Regardless of what transpires, the odds favour an increase in standard recyclate prices.