Overview
The attempts by polymer producers to push volume polymer prices forward in the second half of 2023 appear to have been thwarted. Not only did polymer converters consume existing inventories in order to resist buying higher price material, but both upstream and downstream demand was fundamentally weak.
The upstream weakness is reflected in the across the board fall in contract monomer prices, which sharply contrasts with relatively stable crude oil prices and again the discount for spot over contract monomer costs are significant and the principle cause of contract price reductions. Weakness in downstream markets is evidenced by the UK and European markets suggesting that there is a significant risk of recession in 2024.
Most players remain confused by the lack of demand from converters with questions about substitution, supply chain destocking, fundamental shifts in consumer behaviour, and increased polymer production remaining unanswered.
The situation for engineering polymers remains largely unchanged, with suppliers still seeking to win market share through price competition.
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(Spot and contract prices have been indexed versus their respective January 2023 contract prices)
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Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
-£39.06
C3 (Propylene)
-£34.72
SM (Styrene Monomer)
-£129.34
Benzene
-£128.48
Brent Crude (monthly average)
-£12.52
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)
Q2 2023
£571,043
UK Output
Manufacturing Index
Q2 2023
107.2%
Sales
New Car Registrations (Y on Y)
September 23
153,529
Sales
Retail Sales (Y on Y)
August 23
117%
Labour
Unemployment Rate
May – July 2023
4.3%
Prices
CPI (Y on Y)
September
6.7%
Prices
RPI (Y on Y)
September
8.9%
Interest Rates
Bank of England Base Rate
November
5.25%
Polyolefins
After gaining ground in recent months, Polyolefin prices are falling back in November following the drops in monomers. Ethylene C2 dropped by €45 / MT and Propylene C3 dropped by €40. There were some initial attempts at the start of the month to limit reductions to a very optimistic rollover or a €20 / reduction but within a week, most market players had to concede and pass through the full monomer reduction.
PE and PP markets have seen a switch in fortunes this month with PE now appearing to be longer in supply and weakening in demand with PP showing more signs of a recovery in demand and availability being hit with a few minor issues.
With PE, after some tightness in September and October, there don’t appear to be any challenges in securing material to meet requirements. Imports are improving on the back of improving European pricing in recent months and low demand in the rest of the world. More shipments from USA and Middle East are arriving and more on the way for delivery in December and early 2024. With no expected interruptions to supply, most buyers are operating hand to mouth as further slight reductions are anticipated in December depending on the oil price and consequent downstream movement of monomers.
PP has stabilised a little after some months of volatility. PP Copolymer has seen a few shortages this month for specific grades as a handful of European plants experience unexpected interruptions. Propylene monomer has a few supply glitches at the start of the month but that appears to be resolved and should have no significant impact.
Outlook beyond November is for a slight decline in December depending on monomers and a hope, perhaps not quite an expectation from producers that this will be recovered in January. Some think that without a boost to economies to drive demand, the oversupply situation in both PE and PP Globally will continue to depress pricing and the aspirations of producers to restore margins to the black.
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE has fallen roughly in line with monomer depending on how strongly the seller pushed for increases in September and October.
Supply has stayed relatively stable, but demand has fallen with many converters running minimal stock in the run up to the end of the year.
LLDPE
Supply
Demand
C4 LLDPE has fallen in line with monomer but as with LDPE, it can vary depending on the level of price increases achieved in recent months. Imports are growing as traders and producers look for homes for the excess stock.
C6 LLDPE has lost much of its premium over C4 due to very good availability and Metallocene is suffering in a similar way with new players in the market looking to establish themselves in an increasingly crowded market.
HDPE
Supply
Demand
HDPE has dropped the €45 / MT monomer reduction in most cases, but HDPE is perhaps the only grade that has reported any tightness this month.
There are some reports of availability issues on HD Film.
PP
Supply
Demand
PP has slightly recovered in recent months after losing almost €300 / MT since the start of the year, but the rally has come to an end with the recent drop in monomer. Despite resistance, this has eventually been passed through.
Availability continues to be good, but the market has recovered sufficiently to restore a little bit of balance to the market.
Other Polyolefins
EVA pricing has moved in line with monomer. Polyolefin Elastomers appears to be stable as they are typically priced quarterly.
Styrenics
Contract Styrene Monomer Falls
Styrene Monomer has dropped, settling at €1486/T, a decrease of €149/T from a high point of €1635/T in October. The main driver was a €148/T fall in Benzene, and increased supply.
SM supply has improved, as the long-awaited US imports begin to arrive, and an EU plant has restarted.
For November, EU GPPS and HIPS has decreased by €120T, and EU ABS will decrease also.
GPPS/HIPS/ABS supply chains are running very low. Polymer producers have been running output at a minimum due to poor demand, and converters and distributors running inventory at very low levels due to financial pressures. Therefore, the adjustment in SM/PS prices is likely to be passed on immediately.
It is to be noted that the shift in EU styrene monomer is unlikely to have a large effect on Styrenic materials imported from the Far East, where prices have remained flat for the last few months.
Andrew Waterfield
Product Supervisor – Styrenics
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
October contract SM rose by €60/T, with PS increasing by similar amounts. Monomer shortages impacted PS supply, where producers had been running at minimum output.
SM supply limitations have faded in November, and monomer drops (-€149/T) have pulled prices down, with GPPS and HIPS falling by €120/T. Availability is good, but demand is still weak.
ABS
Supply
Demand
October ABS saw increases of around €60/T for EU produced material as feedstocks pushed higher (SM +€60/t, butadiene +€ 70/t, ACN +€128/t).
November ABS reversed, driven by composite monomer drops (SM -€149/t, butadiene +€ 15/t, ACN +€27/t). Deep-sea material is more stable, but supply is still outstripping demand.
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
There is no significant change to the market with automotive, E&E, and construction all remaining quiet, and little change is expected as we start the rundown to the Christmas period. There are early signs of price increases on some raw materials, specifically for PA6, with increasing costs for caprolactam, however, with a stagnant market and plentiful inventories it will prove difficult to push through any increases.
The benzene contract settled €148/mt lower than in October.
Sharron Jarvis
Product Supervisor – Engineering Polymers
Engineering Polymer Feedstocks
£/Metric Tonne by month
No Data Found
PA6
Supply
Demand
November saw early announcements from some European producers of increases on the back of rising costs of caprolactam, but weak demand is likely to pause any chance of implementing them.
PA66
Supply
Demand
Extremely poor demand, cheaper imports, and downward pressure on prices.
POM
Supply
Demand
No real change on the horizon, cheaper imports from Asia and weak demand continue to put downward pressure on pricing.
PC
Supply
Demand
Demand remains weak in automotive and further pressure on prices with no change expected before the end of the year.
PMMA
Supply
Demand
Demand remains weak, downward pressure on prices with no immediate recovery expected anytime soon.
PBT
Supply
Demand
The outlook remains the same as other polymers, weak demand and over supply putting downward pressure on prices.
Other Engineering Polymers
The situation for other engineering polymers is broadly similar. Most materials are still reducing in price, the market remains weak and there is greater availability from cheaper Asian imports.
Sustainable Polymers
Most recycled materials have fallen in line with the changes in prime grades this month as demand continues to be weak and supply decent. Whilst there are few spots of tightness in the market for higher quality grades, converters are only buying their minimum requirements as we near the end of the year.
Ian Chisnall
Product Manager – Sustainability
Recycled LDPE / LLDPE
Supply
Demand
Recycled LDPE / LLDPE has risen dropped roughly in line with monomer but with some reports that clear and translucent grades are holding prices better than black and jazz.
Recycled HDPE
Supply
Demand
Recycled HDPE has also moved in line with prime material. Natural grades continue to command strong premiums above prime for specific applications such as household goods packaging.
At the other of the scale, there are reports of deals to move stock of “regran” for low value applications.
Recycled PP
Supply
Demand
Recycled PP has seen some slippage on pricing that reflects the movement in prime but some grades in niche applications are holding on to prices better.
The Automotive sector is showing some signs of recovery, and this is a key growth area for recycled PP. Some spot deals for general purpose grades with a broader specification are reported in the market.
Fully natural recycled PP continues to be sold well above prime pricing.
