Overview
The recent imposition of EU tariffs on Russian-origin refinery products, coupled with maintenance programs affecting European naphtha crackers, is causing cost inflation for all polymer feedstocks. As a result, supply restrictions are causing monomer producers to respond by increasing margins, as the supply-demand balance is in their favor.
While it is acknowledged that most polymerization plants in Europe are being run at very low operating rates, most producers will be concerned about the risk of falling below technical operating minimums. Plant reliability will become a major concern, and monomer suppliers are assured of a reasonable level of base load demand.
The issue then becomes one of supply and demand for polymers. Standard polymer suppliers face the twin challenges of low demand, coupled with increased penetration of competitively priced imports. While the most bullish suppliers are trying to push through the full monomer price increase into polymer pricing, most are adopting a more moderate approach by only passing the increase through in part. Many polymer converters are resisting the more moderate price increases and looking to either find suppliers who are happy to make some sales or are using existing material in their own supply chains to meet what is acknowledged to be sluggish demand from downstream.
The situation for engineering polymers remains difficult for suppliers, as downstream demand remains weak and supply is plentiful. On this basis, the pressure to reduce prices continues.
Subject to the monomer market remaining firm, polymer producers are likely to push forward on pricing for March as they make further efforts to recover profitability.
Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
£74.88
C3 (Propylene)
£70.47
SM (Styrene Monomer)
£8.81
Benzene
£95.14
Brent Crude
£12.02
Exchange Rate
1.14
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)
Q3 2022
£556,856
UK Output
Manufacturing Index
Q3 2022
103.6%
Sales
New Car Registrations (Y on Y)
January
14.7%
Sales
Retail Sales (Y on Y)
October
113.5%
Labour
Unemployment Rate
September – November
3.7%
Prices
CPI (Y on Y)
December
10.5%
Prices
RPI (Y on Y)
December
13.4%
Interest Rates
Bank of England Base Rate
February
4.00%
Polyolefins
February has seen a price rebound after the falls in January, with increases in both C2 and C3 monomers behind the push. While Ethylene C2 and Propylene C3 increased by €85 and €80/MT respectively, producers have been unable to pass the full increase through.
After some initial attempts at achieving the monomer, most suppliers fell back to increases of €50-70/MT as the market is well supplied, and buyers have a lot of choice. Trading activity on material shipped 6-8 weeks ago was seen in the market. This led some to believe that rollover was possible, but those hopes were quickly dashed.
The outlook for March is unclear, with a confusing picture over costs for producers and also for the supply/demand balance. Naphtha is still showing strength, even with weaker oil prices, possibly due to sanctions on Russian purchases. Therefore, the cost picture is unlikely to change much.
When it comes to demand, all eyes are on China and the initial reports suggest that the economy is not picking up as well as hoped following the Lunar New Year break. With over-supply likely, prices will be under pressure and with a small uptick in European pricing, we are more likely to see imports arriving in Europe in the coming months.
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE pricing rose by £40-70 / MT depending on starting point with some producers looking for volume deals and others looking to recover as much of the monomer increase as possible.
Availability appears to be good with no expected interruptions.
LLDPE
Supply
Demand
C4 LLDPE increased by £50-80 / MT as some suppliers felt this market was tighter than others and increases close to monomer were justified.
Imports were a little short with weather related issues in USA limiting production and causing some port logistics issues.
HDPE
Supply
Demand
HDPE also saw increases of £50-80 / MT as a relatively buoyant pipe market saw demand increase and this fed into the other sectors with film grades in particular rising more strongly.
HDPE is also subject to the issues of USA weather and imports have been slightly restricted.
PP
Supply
Demand
PP pricing increased by £50-70 / MT depending on grade and to some extent, market sector with some areas seeing a slight uptick in demand. Future outlook for PP remains difficult to see as some market sectors continue to experience weak demand.
PP is broadly expected to be in oversupply in 2023 and this is expected to impact pricing negatively. European producers continue to express concerns over negative margins and the impact on production.
Other Polyolefins
EVA pricing rose roughly in line with monomer as there is some tightness in the European market. Speciality POP grades moved up in line with monomer.
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
In January, Styrene rose by €115/T, and PS producers are generally applied this as a minimum. Supply and Demand were balanced, with some production increases, and converters starting to restock after the break.
February shows little change, with SM rising by only €10/T, and PS increasing by the same. As with December, both Supply and Demand are balanced, but low.
ABS
Supply
Demand
January prices rolled over as raw material costs showed a slight increase (+€20/T at most, as feedstocks shifts were SM +€115/t, butadiene -€100/t, ACN -€170/t), possibly indicating the start of an upwards price trend.
February only delivers a small change, (SM +€10/t, butadiene Rollover, ACN +€41/t) and generally prices rolled over. It is expected demand will improve slightly as converters begin to restock. On the supply side, far eastern materials are showing signs of further increases.
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 to try to balance the market. Cheaper imports are eroding prices further and with demand weak the supply chain seems adequate to fulfil orders.
PA66
Supply
Demand
A similar situation to PA6, weak demand from the market and cheaper imports putting pressure on prices, which is unlikely to change much anytime soon.
POM
Supply
Demand
Low demand and cheap Asian imports are putting further downward pressure on pricing.
.
PC
Supply
Demand
Even with the significant increases in Benzene costs in both January & February, it has not managed to halt the decline in PC pricing.
European production plants are still cutting back capacity to help balance the market, demand remains weak with customers continuing to only buy what is required.
PMMA
Supply
Demand
Imports from Asia continue to put pressure on pricing. European plants continue to cut back on production in the hope they can maintain prices and therefore a more balanced market.
PBT
Supply
Demand
European plants are cutting back production in line with weaker demand, no real changes expected in the short term.
Other Engineering Polymers
The situation for other engineering grades remains complex, most materials are starting to soften in price, and we are seeing greater availability from imports.
