Overview
From the modest feedstock price gains achieved in November, only C2 ethylene has managed to achieve a net gain following a raft of reductions in December. Styrene Monomer (SM) and Benzene reduction falls were dramatic, with both immediate and mid-term implications for styrenic polymers and a wide range of engineering polymers. In the case of standard polymers such as PP, PE and PS, European producers continue to curtail output in an attempt to reduce inventories. This will therefore restore the supply demand balance in their favour.
So far, demand has dipped at a faster rate than expected, which brings with it the real risk that more idling of capacity will eventually result in some significant overshoot. There is already some evidence that PPHP supply is now tightening in the UK with restricted availability of some injection moulding grades. In the engineering polymers market there is increasing evidence that reduced global shipping cost, coupled with low demand in China and Asia, is now resulting in renewed supply of more competitively priced POM, PC and ABS.
The fall in crude oil pricing, coupled with a weaker USD will certainly help to curtail energy costs and put further pressure on those producers who are applying energy surcharges to kerb, or at least reduce, these additional premiums. As a turbulent 2022 draws to a close, it will be interesting to see if polymer producers make some bold moves with regard to January pricing, or if they take a more moderate approach and wait for clearer indications of the market fundamentals.
Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
-£21.72
C3 (Propylene)
-£26.07
SM (Styrene Monomer)
-£114.70
Benzene
-£170.32
Brent Crude
-£34.62
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 2022
£560,089
UK Output
Manufacturing Index
Q3 2022
103.6%
Sales
New Car Registrations (Y on Y)
October
26.4%
Sales
Retail Sales (Y on Y)
October
114.1%
Labour
Unemployment Rate
July – September
3.6%
Prices
CPI (Y on Y)
October
11.1%
Prices
RPI (Y on Y)
October
14.2%
Interest Rates
Bank of England Base Rate
November
3.00%
Polyolefins
December has seen falls generally in line with the monomer reductions of C3 Propylene down €30 / MT and C2 Ethylene down €25 / MT. Market is quite muted with a short month on top of general reduced economic activity.
Outlook for January is for much of the same with pricing generally expected to be around December levels. Monomers should continue around these levels with Naphtha readily available. Supply situation is expected to continue to be more than adequate to meet demand and whilst increased imports are expected in early 2023, local European Producers are cutting production or extended planned shutdowns to try and balance supply and demand. With all materials readily available, buyers are moving to “Just in time” rather than stocking up for “Just in case.”
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE pricing is typically around £20-30 / MT down from November in line with monomer. Some spot offers heard in the market with producers and traders looking to stimulate sales before the end of the year, but market interest is limited with many converters extending Christmas shutdowns.
LLDPE
Supply
Demand
C4 LLDPE fell roughly in line with monomers but is under slightly more pressure with much talk of imports on the way and expectations of reductions in the New Year.
Some suggestion that those looking for immediate delivery may be disappointed with minor logistics issues from Europe causing delays. Some Metallocene grades were also reported as tighter than previous months.HDPE
Supply
Demand
HDPE also fell in line with monomers and was possibly under more pressure as supply was plentiful and demand relatively weak. As with LLDPE, exports from USA and Middle East are heading here with new capacity coming on stream and China demand reduced.
PP
Supply
Demand
PP fell with monomers into December and typically saw around £25 / MT reductions though with some producers keeping sites offline for extended periods, there was hope for a more balanced supply and demand picture to keep prices more level.
Demand for PP continues to be relatively weak, and the outlook for January is for prices to continue to be around current levels.Other Polyolefins
EVA pricing also fell around £20 with monomer. Whilst supply from some producers continued to face significant restrictions, the market is generally well supplied and like other materials in consumer goods, seeing relatively weak demand. Speciality POP grades were also down with monomer and saw some lower spot pricing for special deals.
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
In November there was small rise in SM (+€4/T) but a -€50/T price reduction in PS was announced. Despite strike action closing one PS producer completely, there was still enough material available to satisfy the much reduced demand.
In December, the upward trend of SM ended, with a fall of €-132/T, even though several EU SM plants are closed, or running at reduced outputs. PS price will follow the fall.ABS
Supply
Demand
November delivered a large price drop of €200/T due to falling composite costs (SM +€ 4/t, butadiene -€150/t, ACN -€ 5.5/t). EU ABS production remained cut, but imported grades took up the slack. Demand was low as further decreases were expected.
December looks very similar, with prices expected to continue the downwards trend. Risk of recession is making buyers very cautious, as well as the approaching year end. EU grades still remain short, and imports are beginning to dominate.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
European plants continue to cut back on production but with weaker demand as we head into the festival period it is expected that prices will rollover at best.
PA66
Supply
Demand
As with PA6, supply and demand remain balanced. Prices will remain high but stable as we approach the end of the year.
POM
Supply
Demand
With continued lower demand from the automotive and building sectors there is evidence of some downward pressure on pricing.
PC
Supply
Demand
Due to weaker demand in the market and the drop in Benzene costs, prices are starting to fall rapidly. More specialised grades are still restricted so prices for these remain stable but high.
PMMA
Supply
Demand
Availability of Asian imports are improving on standard grades which in turn could threaten supply in Europe with the continued cutbacks on production. The more specialised grades remain restricted, and, in most cases, prices are still increasing.
PBT
Supply
Demand
Weaker demand halts any further price increases as many moulders are only ordering in small lots to fulfil immediate orders only.
Other Engineering Polymers
The situation for other engineering grades remains complex, difficult to predict and depends very much on the material type.
