Price Reports July 2014

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

Standard Thermoplastics July 2014: Notations for most grades reflect rising feedstock costs / Producers seldom achieve extra margin component / Situation unlikely to improve in August

PE: European polyethylene producers largely succeeded in passing on the EUR 50/t rise in the cost of the ethylene (C2) feedstock in July. On the other hand, although some producers managed early in the month to win an extra EUR 20/t to improve margins, the hikes fizzled as July wore on due to the threat of declining business, especially with the injection moulding grades.

In the wake of the EUR 15/t decline in the monthly ethylene contract, prices are likely to soften in August. Producers will nevertheless try to hang on to the cost reduction, not least since impending maintenance turnarounds mean they are under no pressure to sell. Although the summer holidays are putting a damper on demand, several converters are already eyeing the end-of-year bonus, which could result in bigger orders than expected.

The ethylene cost rise was the driving force behind the increases for EVA grades with a VAM content of 18%, which tacked on an average of EUR 40/t in July. Headed into August, the supply situation is likely to ease, since one German VAM producer resumed production at the end of July. The latest decline in the cost of C2 is unlikely to have much of an effect on prices since tight availability means producers are under little pressure to sell.

PP: At the beginning of the third quarter, producers were looking for hikes of up to EUR 30/t for standard PP, intending to add an “indispensable” margin component to the higher C3 cost. However, as converters were increasingly disinclined to accept this, their suppliers began to downplay the margin component. Notations ended the month slightly above the cost increase. Where producers faced supply bottlenecks, prices were sometimes higher.

As the C3 increase was not strong enough to move the auto industry’s indexed contracts for PP compounds to a higher level, prices stayed put. With the decline of EUR 20/t in August’s propylene contract, producers’ cost burden eased slightly. But since they consider their margins as insufficient, they will hardly agree to rebates. At least this will be the case for those suppliers with output restrictions, some of whom have not yet lifted the FM declared earlier.

PVC: S-PVC producers’ goal of improving their margins at the onset of Q3 proved illusory. Although most of them had called for hikes of up to EUR 50/t, the fact that one competitor was content with the proportionate EUR 25/t rise in ethylene (C2) costs nipped all others’ efforts in the bud. With sufficient volumes in the market, the success of their endeavours was questionable anyhow. In a few rare instances manufacturers were able to hold on to a slight margin gain, although this did not have any generalisable impact on the PIE range. As a result, producers remain under pressure.

Both compounds and paste suppliers were also only able to push through the proportionate rise in feedstock costs. The proportionate C2 decline in August came to EUR 7.5/t. Although by press time producers had not yet launched any calls, it is highly unlikely that they will factor the decrease into their notations. Most will insist on a rollover. With demand expected to be down during the holiday season, it will, however, become increasingly difficult for them to hold on to the current price level.

PS: On the back of the steep EUR 82/t rise in the styrene reference contract, European prices of styrenics climbed upward on a broad front in July, albeit not all at the same pace. While at the beginning of the month, most PS producers were able to pass on the full rise in the SM contract, the price momentum subsequently weakened. By contrast, EPS producers were only able pass on their proportionate cost increase. ABS showed quite a mixed picture. While buyers of extrusion material had to pay all or at least a major share of their suppliers’ higher costs, in the highly competitive market for injection moulding material, they had to bear a lesser share.

In view of the high prices, several converters simply did not buy. Many did not need to, anyway, as they had stocked up at lower prices in June. The approaching summer holiday season also left its mark on demand. Once the holiday period reaches its zenith in August, demand will be even more subdued, and this will give buyers their only strong chance at the bargaining table. They can expect no relief from the feedstock side, especially as August’s SM contract moved sideways, dropping by only EUR 2/t.

PET: European PET producers were able to factor in the rise in PX and MEG costs in orders for small or medium-sized lots. The gap towards bulk buyers, who flexed their muscles and thereby pushed through a rollover, widened as a result. Several special offers on the trade channel also proved irritating. To date, however, the widely feared shock effect of the new plants commissioned in Egypt, Turkey, Belgium and the UK has yet to set in. North American and Asian PET notations also followed the upward cost drive.

With upstream notations on an unsteady upward course, PET prices could rise again in August. Although initial volumes from the new UK facility are scheduled to arrive early in the month, their impact on the market is unlikely to be felt immediately.

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 July 2014

Engineering Thermoplastics July 2014: Rising costs drive up ABS, PC, some PA grades and PMMA / PBT, POM and PP stable / Demand still solid despite holiday season / Upward pressure

The change of quarter and the start of the second half-year left their mark on European prices of many engineering thermoplastics. Polycarbonate producers, who have been nudging up the price of freely negotiated material since the start of the last quarter, successfully incorporated the increases into their longer-running order agreements. After the rise in the cost of benzene had pushed up natural PA 6 notations during the course of Q2, reinforced grades containing fillers and additives followed suit when the third quarter began. The increase did not leave particularly low-lying black PA 6 prices untouched either. Following the ongoing upward price spiral, the PIE range for PMMA also moved up at the start of the new quarter. By contrast, notations for PA 6.6, PBT and POM began Q3 virtually unchanged.

In the case of commodity-related ABS, the large SM rise pushed notations up. By contrast, PP compounds prices remained unchanged. The small increase in the propylene notation was simply not enough to lift indexed notations to a higher level.

For the traditional engineering materials, the summer holiday period usually does not ring in a lull in demand. While the change to the new quarter passed fairly unspectacularly as far as prices are concerned, the latest rise in the cost of benzene is building new pressure, which PC and PA will find it difficult to escape in August. Mounting MMA costs indicate a similar upward trend for PMMA. With their feedstock costs on the decline, POM and PP compound prices could remain stable. The same is true for ABS, where the cost mix appears to have firmed.

Polyurethane feedstocks July 2014: Only MDI remains stable / TDI and polyols make gains / Upward pressure persists / Moerdijk outage still being felt

Among the principal polyurethane feedstocks, only MDI prices remained stable in July. With trading activity slack, the upward momentum for benzene was not strong enough to play a role. For TDI, the picture was entirely different. Despite cuts in production capacity, producers succeeded in turning around the price erosion seen throughout the first half year.

Flexible polyols firmed strongly on the back of significant shortages of propylene oxide as the SM/PO plant at Moerdijk in The Netherlands remained off line. Rigid polyols reacted more slowly to the ethylene cost drive, but all grades were affected. All in all, the upward trend in PU notations seems likely to hold, even if it is the summer holiday season. How much farther upward prices will move will depend on how strong the pressure is from starting materials benzene, toluene, propylene and ethylene.

Even though the market is quieting in some segments, the supply restrictions for TDI in particular but also for flexible polyols and to some extent rigid polyols will be the deciding factor in price movements. MDI, by contrast, is likely to remain stable.

Composites/GRP July 2014: Resins prices follow styrene upward / Strong demand in summer holiday month / Some maintenance-related tightness / Glass fibre products unchanged

With demand surprisingly strong for summer and many resins plants in scheduled maintenance, buyers of medium reactive ortho resins who had not stocked up earlier found themselves between a rock and a hard place. Producers, by contrast, were in a favourable position. They managed to push through nearly a third of their envisaged hikes of EUR 70-100/t, helping to compensate in part for higher production costs – feedstocks styrene and propylene were up by EUR 82/t and EUR 15/t respectively.

In August, notations look likely to stabilise at a high level, even if demand during the summer holiday period should be somewhat weaker. The reference contract for the major feedstock, styrene, dropped back by EUR 2/t, propylene was down EUR 20/t, while maleic acid was in a rollover and the phthalic acid anhydride contract was up EUR 20/t, so the cost situation was more or less neutral. Also, as buyers' inventories appear to be well filled, producers' chances of pushing any closer to their price targets this month appear unlikely.

Notations for glass fibre products remained unchanged in July. Supply could thin somewhat in August, if reports of maintenance of a furnace at a medium-sized producer prove accurate, but as demand is seen as declining slightly, this should not affect prices.

Standard Recyclate July 2014: Following virgin material rises, cost of clean regrind also up / HDPE pipe, PP and PET production scrap tight / Possibility of additional hikes

Recyclate prices in July continued the upward trend of the previous month. The rises were particularly strong for clean grades, after regrinders found themselves having to pay more for LDPE and PP production scrap in the wake of virgin material hikes. By contrast, notations of simpler grades remained stable. The price of rHIPS also rolled over, largely as a result of the roller coaster movement on the virgin material front, which did not yield any concrete price trend.

Looking ahead towards the coming weeks, recyclate notations could continue their ascent, especially if availability of production scrap – for rHDPE pipe, rPP homo and rPET in particular – does not improve. Regrinders are hoping that the imminent summer vacation will result in a decline in demand for production scrap, which in turn would lower their purchasing costs.

Engineering Recyclate July 2014: Stability dominates the picture / Increases in primary prices have not yet seeped through / Asian imports hold prices down / Demand still robust / Price hikes becoming more probable

In July, virtually nothing has changed as far as engineering recyclate prices are concerned. Notations remained stable almost across the board. On the one hand, prices on the primary markets also stagnated despite the growing cost pressure. On the other, the intentions of secondary material producers to raise prices were frequently thwarted by cheap Asian imports, not only – as so often – with POM, but also increasingly with PA 6. In some cases, the prices are even below those of the regrind product. Nevertheless, the majority of customers are still giving preference to European recyclate material in view of the clearly specified, guaranteed quality.

At present, there are signs of restrictions in the availability of production scrap, at least with some products. It is to be expected that this will be reflected fairly soon in the prices and thus in regrinders' costs. In the next few weeks, prices of many engineering recyclate materials will come under increasing pressure, particularly as there is at present no recognisable sign of any decline in demand.

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Price Reports July 2014

Articles: July 2014

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