Overview
For the first time in a number of months, feedstock producers have achieved price increases across the board, halting what has been a strong downtrend since July.
Despite a public holiday at the beginning of November in continental Europe, delays in the settling of C2 and especially of C3 contract rates on the 4th of November gives some indication of hard-fought negotiations. More moderate increases on C3 is still reflective of the greater abundance of propylene and the relatively low spot price for this commodity.
Perhaps the more important issue relates to polymer pricing. Based upon feedstock cost increases, already hard-pressed polymer producers in Europe will be unwilling to make further concessions on price and instead will be looking to increase prices in order to move back towards profitability. Whilst these may end up as noble ambitions, it really does look like prices are now at the bottom and sooner or later the next move will be upward.
December price increases are an exception. It is possible that buying activity, combined with lower inventory levels will kick-off a price inflation spiral. It is also clear that ‘special offers’ have disappeared from the market. Even if prices are not increasing, there is a strong feeling of price consolidation which typically precedes an upward movement in the market.
In the case of engineering polymers and higher value styrenic polymers such as ABS, it is now apparent that lack of demand in Asia, especially China, is stimulating deep-sea exports to Europe and pricing is becoming increasingly competitive. The greater reliance that this group of materials has on global economic conditions will override the pressure of input cost increases. On this basis, it looks like pricing may now have peaked.
Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
£30.48
C3 (Propylene)
£17.42
SM (Styrene Monomer)
£3.48
Benzene
£36.57
Brent Crude
£17.87
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
Q2 2022
99.8%
Sales
New Car Registrations (Y on Y)
September
4.6%
Sales
Retail Sales (Y on Y)
September
111.1%
Labour
Unemployment Rate
June – August
3.5%
Prices
CPI (Y on Y)
September
10.1%
Prices
RPI (Y on Y)
September
12.6%
Interest Rates
Bank of England Base Rate
November
3.00%
Polyolefins
November has seen some stability in the market following the price rebound in October. Monomers both rose, with C3 Propylene increasing €20 / MT and C2 Ethylene up €35 / MT. Whilst some producers sought increases on the back of these feedstock movements, most eventually retreated to rollover as demand remained muted. Some are still seeking monomer increases on LDPE citing individual shortages.
Others reliant on deep sea imports from either Middle East or USA have held their ground on increases for LLDPE, with reports of delays on shipments. Energy surcharge discussions have been quieter this month and it remains to be seen if the promised push for increases in this area goes forward. With no significant supply interruptions and market interest low in the face of global economic factors, it’s a buyers’ market and producers may not be able to force through surcharges.
Outlook for December is expected to be very similar but with many companies proposing early shutdowns, demand could weaken further. No significant movement in monomers is expected for December so a likely scenario is rollover in polymer prices. Producers are cutting production or extended planned shutdowns to try and balance supply and demand.
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE pricing is a mixed picture in November with some looking for increases of €35 / MT to cover the monomer whilst others offer small discounts to encourage buying interest. However, very low spot offers are long gone with the market more balanced and producers more in control of their stock position. Overall, pricing is close to rollover.
LLDPE
Supply
Demand
C4 LLDPE pricing is largely a rollover with a few producers looking for the monomer increase. However, with material available to meet market demand, a rollover is a realistic expectation for most cases.
Spot deals are no longer available helping to bolster the price increases gained in October but there is an expectation of volumes from USA arriving in early 2023 that will push the market into an oversupply situation again.
HDPE
Supply
Demand
HDPE has stabilised at rollover in November after a period of rollercoaster pricing with supply and demand never seemingly in balance. Whilst some have attempted to push through increases in November, the market has no need to accept higher offers, and these are being widely rejected.
The medium-term outlook is focussed on imports, some expect a tsunami to Europe in the New Year whilst others anticipate a China recovery and USA exports heading elsewhere. The reality is likely to be somewhere in between and there is hope that we will have some balance and stability in the market.
PP
Supply
Demand
PP rolled over into November. Whilst some initially looked for the monomer increase of €20 / MT, most realised that this was unrealistic and were happy with rollover following the price recovery in October.
Supply has been cut by many producers and some suffered with Industrial Action recently, but demand remains relatively weak in the PP sector with many industries suffering in the global economic slowdown and Automotive production still restricted. Outlook for December is broadly the same with pricing movements expected to be minimal.
Other Polyolefins
EVA pricing was mixed with some reducing prices to stimulate demand and others rolling over as they suffered from restricted production. Supply of EVA in Europe is still lower than usual but weaker than expected demand is likely to put more pressure on pricing in the coming months.
Speciality PP grades were mostly rollover but some increases in line with monomer were seen.
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
In October, the downward trend of SM ended, with a small but significant increase of €9/T. Despite this, PS prices continued to fall, with reductions of up to €55/T. Supply was very low, as strikes in France stopped cracker production, but demand also remained poor.
November seems to bring much of the same. There is a small rise in SM (+€4/T) but a price reduction in PS is expected, as while strike action is seriously affecting the output of a major PS producer, there is still enough material available to satisfy the low demand.
ABS
Supply
Demand
October delivered another reduction in price (SM +€ 9/t, butadiene -€30/t, ACN -€ 33.50/t). EU ABS production was cut, and imported grades at lower prices began to feature strongly in the market.
November looks very similar, with little shift in pricing. Risk of recession is making buyers very cautious, as well as the approaching year end. EU grades 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 production plants are currently only running at just over half capacity, but with weak demand it is expected that contracts will be easily fulfilled as imports from Asia bridge the gaps. Any further price increases will prove difficult at this time.
PA66
Supply
Demand
A similar picture to PA6, supply is balanced even with force majeures on some European plants still in force. With extremely low demand prices are likely to remain high but stable.
POM
Supply
Demand
European production has improved slightly, and with lower demand from the automotive and building sectors there is evidence of some downward pressure on pricing.
PC
Supply
Demand
The Benzene contract for November has settled up €42/mt from last month, but due to weaker demand in the market and sufficient imports from Asia prices are likely to remain stable, even with the European production plants making cutbacks. Specialised grades are still restricted so prices for these remain high.
PMMA
Supply
Demand
Producers are making cutbacks to balance the market and hold onto price increases, however this is proving difficult with cheaper imports arriving from Asia.
PBT
Supply
Demand
There is downward pressure on pricing with a fall in the PX contract and weaker demand, however there are still long lead times for specialty grades.
Other Engineering Polymers
The situation for other engineering grades remains complex, difficult to predict and depends very much on the material type, but shortages and cost increases remain the norm for every polymer type.
