Overview
Sluggish demand in the polymer sector is not just affecting the UK and the EU27. All regions and all applications are seeing a significant slowdown and polymer supply remains plentiful. In these circumstances buyer behaviour becomes the polar opposite of a tight market with price inflation. Buyers are adopting both a ‘wait and see’ attitude on the basis that prices are likely to be lower tomorrow than they are today and not tying up valuable cash in inventory as economic uncertainties cause concerns throughout the supply chain.
The drop in feedstock/monomer costs from May to June was greater than market expectations, and whilst it looks like C2 and C3 price reductions were underwritten by a corresponding reduction in Brent Crude, a decision by OPEC at the end of May resulted in oil prices rallying back up towards the average levels seen in May. If the recovery in Brent Crude is sustained there are likely to be significant implications for European Polymer Producers, who predominantly use Naphtha as feedstock and Naphtha prices typically track crude oil prices.
As the economics of most European polymer producers is already negative, this will cause losses to stack up further and sooner rather than later many will make the difficult decision to shutter production. In due course this will lead to a rebalancing of supply and demand with an expectation that prices will start to turnaround in late August, or early September after the European summer holiday season.
In the case of Engineering Polymers the situation of low demand continues to pressure prices with materials including ABS, POM and PC facing the greatest pressure as suppliers from Asia seek to recover sales in Europe.
As outlined below, demand throughout the system is low and polymer converters are struggling to take full advantage of low-cost polymer with their own order books being scant; moreover, the raw material input cost reductions are being used to cover costs rather than being able to generate profit and positive cashflows.
Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
-£69.68
C3 (Propylene)
-£69.68
SM (Styrene Monomer)
-£110.62
Benzene
-£95.82
Brent Crude
-£47.00
Exchange Rate
1.15
Mike Boswell
Managing Director – Plastribution Group
Oil Prices
No Data Found
Exchange Rates
No Data Found
UK Economic Data
Topic
Item
Date
Change
Trend
GDP
Real GDP (Q on Q)
Q4 2022
£558,005
UK Output
Manufacturing Index
Q4 2022
105.4%
Sales
New Car Registrations (Y on Y)
March
16.7%
Sales
Retail Sales (Y on Y)
February
116.3%
Labour
Unemployment Rate
January – March
3.9%
Prices
CPI (Y on Y)
April
8.7%
Prices
RPI (Y on Y)
April
11.4%
Interest Rates
Bank of England Base Rate
March
4.5%
Polyolefins
June has seen substantial drops in Polyolefin pricing following the Monomer reductions of €80 / MT for both Ethylene C2 and Propylene C3.
Price movements are in a wide range from product to product with PE under much more pressure due to significant oversupply and weak demand. PP is in a more balanced position and is typically moving broadly in line with monomer.
Outlook for July is looking like slight reductions as we’re probably still a month or so from seeing supply and demand getting back in balance, particularly on PE. Beyond the summer, many commentators are confident of an upswing both in demand and consequently an increase in pricing. Some suggesting a 15% swing back up by October. European Production continues to be limited to try and restore balance and it wouldn’t take a significant upward shift in sentiment to cause some short-term issues in availability.
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE is readily available, and demand continues to be weak. LDPE is typically a domestic market with demand mostly being met by local production, but we are seeing higher levels of imports upsetting the balance.
Prices are falling by at least €100 / MT and reductions of €150-200 / MT have been reported by volume buyers.LLDPE
Supply
Demand
C4 LLDPE is roughly fallen slightly more than monomer with some grades under more pressure than others. C4 has mostly reduced by €100 / MT with the supply situation not quite as plentiful as LDPE.
C4 typically has a price now higher than LDPE, Metallocene has come under pressure with reductions of more than €100 / MT as imports arrive and traders look for homes. LLDPE C6 has reduced by less but is now competing on virtually the same level as Metallocene as a result.HDPE
Supply
Demand
HDPE has been a little mixed with some reports of shortages, but these vary from producer to producer. Some are long on Injection and short on Blow Moulding and vice versa.
Overall, the picture is relatively balanced, and prices have moved down by around €100 / MT. As with all grades of PE this month, further reductions can be achieved by those looking to secure volume at these new price levels.PP
Supply
Demand
PP has seen better demand this month and price movements have reflected this. PP Copolymer is about the only grade that has only fallen roughly in line with the monomer drop of €80 / MT. Some import grades are reported below this, but European producers are limiting production and took a firmer approach to pricing. Some even looked to not pass on the full monomer reduction but relented following pressure from buyers.
PP Homopolymer saw slightly more generous falls of €100 / MT with more flexibility in choice of grade.Other Polyolefins
EVA pricing reduced with monomer (€80) from some and -€100 from others as they looked to stimulate sales in a quiet market. Speciality POP grades typically rolled over due to unexpectedly better demand from speciality sectors.
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
May, SM trended upward (+€55), but GPPS and HIPS only rose by €20/T on average, as producers were unable to pass on the full increases. PS supply exceed demand, despite produced cutting production. Demand remained low due to multiple UK public holidays, and the expectation of a drop in June stopped any stock building activities.
June SM has fallen by €127/T, and GPPS/HIPS are following, with 3-digit discounts possible. Supply is the same as May, and there are also rumours of excess material in producer inventories. Demand remains low, but there could be some converter restocking, driven by the temptation of low price.
ABS
Supply
Demand
May ABS rolled over, with the market in no mood to accept price increases based on a slight increase in composite monomers (SM +€55/t, butadiene -€10/t, ACN +€67.5/t). Oversupply was an issue, even with EU plants throttled, but demand in May was poor, not assisted by multiple holidays in the UK.
June brings promise of further reductions with the fall in monomers (SM -€127/t, butadiene -€ 80/t, ACN -€92.50/t). Oversupply still stands, and demand is held back by a weak economy and high interest rates, restricting any appetite for inventory building.
PC/ABS
Supply
Demand
As usual, PC/ABS price is following the trend of ABS.
Other Styrenics
SAN and specialities such as ASA and SMMA continue to follow the price trend of ABS.
Engineering Polymers
Sharron Jarvis
Product Supervisor – Engineering Polymers
Engineering Polymer Feedstocks
£/Metric Tonne by month
No Data Found
PA6
Supply
Demand
Demand remains very weak in all sectors, but especially construction and E&E are suffering. European plants continue to cut back production to mirror the poor demand.
Prices are likely to fall further in the coming months with no change in the market expected until after the summer period.PA66
Supply
Demand
A comparable outlook to PA6, extremely poor demand from the market and cheaper imports putting pressure on prices, no changes on the horizon.
POM
Supply
Demand
Reduced output from most plants due to extremely low demand. Cheaper imports from Asia continue to put downward pressure on pricing and the supply chain.
PC
Supply
Demand
PMMA
Supply
Demand
Cheaper imports from Asia and reducing energy costs are putting significant pressure on pricing. Poor demand in all segments but especially automotive which is not expected to improve until much later in the year.
PBT
Supply
Demand
Weak demand and reducing pricing with no change on the horizon.
Other Engineering Polymers
The situation for other engineering grades remains complex, all materials are reducing in price, and we are seeing greater availability from imports.
