In December, European standard thermoplastic prices declined across the board as a result of lower feedstock costs and weak demand. The already weak demand picture was further exacerbated by the short production month and converters reducing stock levels prior to preparation of the end-of-year balance sheet.
Polyethylene prices fell in line with the reduction of €25 per metric ton in the ethylene reference price. Hard Pvc Sheet
Polypropylene prices were down by just less than the €30 per tonne reduction in the propylene reference price. Base PVC prices fell for the eighth month in a row with a reduction of €60 per tonne. Polystyrene prices saw a triple-digit reduction following the €132 per tonne fall in the styrene monomer reference price. PET prices declined by a mere €20 per tonne as producers’ efforts to reduce stock levels appeared at last to be paying off.
Demand very low In December, polymer demand continued at a very low level across most end markets. While demand has picked up slightly for the food and pharmaceuticals packaging sectors, demand from most other markets is well below normal levels. In December, order activity was further constrained by the short production month and by converters reducing stock levels prior to preparation of their year-end balance sheets.
Supply tight European producers have trimmed production and brought forward plant maintenance programs to counteract the low demand. There is, however, sufficient material available to meet the needs of converters. Supply has also been supported by a steady inflow of imported material. The high European prices and lower freight rates are tempting producers to divert more of their cargoes to Europe.
A selection of the latest production developments is presented below:
While few contract prices had been concluded at time of conducting the prices research during the first week of January, most market observers were expecting European standard thermoplastic price developments to show a mixed picture this month.
Polyethylene and polypropylene prices are likely to fall sharply after both ethylene and propylene reference prices settled down by €95 per tonne compared to the previous month. PVC prices are also likely to fall in line with the proportionate impact of the lower ethylene price on the PVC cost base.
PS prices, on the other hand, are expected to increase sharply this month following a surge of €115 per tonne in the styrene monomer reference price. PET prices are expected to stabilisz as costs fall, imports become scarcer and producers maintain strict production controls.
Supply remains tight across all polymer classes while demand should recover gradually as converters restock.
Western European standard thermoplastic prices, euros per tonne
Low density polyethylene, linear LDPE
In December, LLDPE and LLDPE prices fell 20-25 euros per tonne due to the lower ethylene reference price (down €25/tonne), the short production month and very weak demand.
European producers maintained strict production controls and supply was generally low. Imports from the U.S. and Asia, however, plugged any gaps in the supply position. The already weak demand was made even worse by the short production month and converters not buying additional stock for accounting reasons.
A reduction of €95 per tonne for the January ethylene reference cost heralds a sharp reduction for L/LDPE prices at the start of the New Year. While few deals had been concluded at time of writing, most market observers were expecting L/LDPE prices to tumble more or less in line with the lower cost settlement. Demand is likely to pick up slowly while higher imports are supporting supply.
High density polyethylene In December, HDPE prices fell due to weak demand and a reduction of €25 per tonne for the ethylene reference price. Blow molding and blown film grades saw price reductions in the order of €20-25 per tonne while injection molding prices fell by €10 per tonne.
Material availability remained tight as producers maintained strict output controls. Any supply gaps was however made up by a steady inflow of imports from Asia. The very weak demand position was made even worse by the short production month and converters buying the absolute minimum with an eye on their end-of-year stock position.
A reduction of €95 per tonne for the January ethylene reference cost heralds a sharp reduction for HDPE prices at the start of the New Year. While few deals had been concluded at time of writing, most market observers were expecting HDPE prices to tumble more or less in line with the lower cost settlement. Demand is likely to pick up slowly while higher imports will support supply.
Polypropylene PP prices fell by €20 per tonne in December as a result of weak demand and a reduction of €30 per tonne for the propylene reference price.
Supply remained tight due to planned and unplanned plant maintenance turnarounds and the maintenance of strict production curbs. Any supply gaps were however adequately filled by a steady inflow of imports from Asia. The very weak demand position was exacerbated by the short production month and converters buying the absolute minimum with an eye on their end-of-year stock position.
A reduction of €95 per tonne for the January propylene reference price heralds a sharp reduction for PP prices at the start of the New Year. While few deals had been concluded at time of writing, most market observers were expecting PP prices to tumble more or less in line with the lower propylene cost settlement. Demand is likely to pick up slowly while higher imports will support supply.
In December, base PVC prices declined €60 per tonne compared to the previous month while flexible and rigid PVC compound prices slipped just €40-45 per tonne as additive costs fell slightly.
Material availability was adequate despite some planned plant maintenance turnarounds and strict production controls as any supply gaps were adequately filled by a steady inflow of imports from Asia. The very weak demand position was exacerbated by the short production month and converters buying the absolute minimum with an eye on their end-of-year stock position.
PVC prices remain under pressure in January as a result of the sharp €95 per tonne reduction in the ethylene reference price and competition from inexpensive Asian imports. While few deals had been concluded at time of writing, most market observers were expecting base PVC prices to fall more or less in line with the lower cost base.
In December, polystyrene producers were not prepared to give away more than a part of the €132 per tonne reduction for the styrene monomer reference price due to rising energy costs. GPPS prices dipped by just over €100 per tonne with high impact PS prices down by €95 per tonne.
Supply remains tight due to production cuts, yet there was sufficient material to meet the low demand. Demand was weak because of the short production month and converters keeping an eye on stock levels for year-end accounting reasons.
The January styrene monomer reference price settlement soared by €115 per tonne due to tight supply and a surge in benzene costs. PS prices are expected to increase sharply this month and major producer have announced planned price hikes of €120-150 per tonne. Supply remains tight while demand is expected to pick up as converters begin to replenish their inventories.
The European PET market returned to calmer waters in December following the turmoil of the previous month. PET prices fell by around €20 per tonne last month compared to a €40 per tonne reduction for the November paraxylene contract price.
PET producers attempts to curb production and stabilize supply appears to be working as producers’ inventories finally moved downwards. There was also fewer competitively-priced Asian imports available last month. PET demand was very low as December, a traditionally a weak month for beverage bottle production.
There are signs that the European PET market may be about to turn a corner in January after the recent turbulence. PET prices are expected to stabilize as costs fall, imports become scarcer and producers maintain strict production controls. As demand reached rock bottom last month, producers are more optimistic about a gradual recovery in order activity.
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