Overview
The now former Chancellor of the Exchequer’s ‘mini budget’ announced on September 19th caused significant concern about the prospects for the UK economy, which resulted in a significant devaluation of GBP and was further exaggerated by a strengthening of the USD. Fortunately, the situation improved at the end of the month and with this the prospects of currency related polymer price increases for UK plastics converters was largely mitigated.
The issue of increased energy costs remains a vexed question amongst polymer producers, with an increasing number seeking to apply energy surcharges to base polymer prices. This approach creates some difficulty in determining the actual price of polymer. None-the-less, the economies of polymer production continue to look challenging and clear efforts are being made to reduce output in order to match supply more closely with demand.
For standard polymers it is increasingly a question of when, rather than if, prices will increase.
Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
-£39.36
C3 (Propylene)
-£43.74
SM (Styrene Monomer)
£7.87
Benzene
£19.24
Brent Crude
-£13.76
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)
Q2 2022
0.1%
UK Output
Manufacturing Index
Q2 2022
99.8%
Sales
New Car Registrations (Y on Y)
August
1.2%
Sales
Retail Sales (Y on Y)
July
115.5%
Labour
Unemployment Rate
April – June
3.8%
Prices
CPI (Y on Y)
July
10.1%
Prices
RPI (Y on Y)
July
12.83%
Interest Rates
Bank of England Base Rate
July
1.75%
Polyolefins
Q – When is a Price Increase not a Price Increase?
A – When it’s an Energy Surcharge…
October saw the recent falls in Polyolefin prices halted despite a further drop in monomers. C3 Propylene fell €50 / MT and C2 Ethylene fell €45 / MT. Whilst demand remained muted, supply was sufficiently restricted to at least achieve a rollover to a small increase for many sellers in the market. Many of the major producers proposed the much-discussed Energy Surcharges whilst others sought more standard price increases citing rising production costs. Increases approaching €200 were asked at the start of the month but eventually, the market settled between rollover and +€50 / MT depending on the grade and the starting point. With the weaker £, UK buyers faced increases regardless of the movement in € pricing. Some grades started to see a little tightness in availability, especially those more reliant on imports into Europe such as LLDPE C4 and HDPE.
Outlook for November is generally considered to be relative stability but with many unknown factors. Oil pricing could rise with the cuts to production leading to Naphtha pricing recovering and affecting monomer pricing. Imports to Europe are mixed with some low offers reported but with limited volumes. If planned rail strikes go ahead in the USA, this will impact the ability to send cargoes to Europe.
For now, many producers are happy to see the decreases stop. Whether or not they can continue to push through the proposed Energy Surcharges in the coming months remains to be seen. If demand remains weak, pricing will probably bobble around the current levels. There are rumours that producers will limit production to start 2023 in a stronger position to push through the increases they want to restore profitability.
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE pricing rose in October by approx. £50 / MT with a combination of € increases and a weaker £. Supply was slightly restricted with some production issues. Buyers continued to seek deals, but the very low spot offers for volume are long gone.
European producers stayed strong on increases and with no imports available, the new pricing has been accepted in the market.
LLDPE
Supply
Demand
C4 LLDPE pricing rose by approx. £30-50 / MT as availability started to tighten.
With pricing hitting the bottom, some converters looked to stock up and spare volumes were quickly sold. Major producers in Europe
were rumoured to be limiting orders for the rest of the year as they tried to restore pricing to acceptable levels. Imports are limited but with demand still lacking for key market sectors, further price increases are considered unlikely.
C6 grades appear to have better availability and have pricing closer to € rollover giving a small £ increase. Metallocene is getting tighter and has quickly moved from discounts for volume to £60-80 / MT increases.
HDPE
Supply
Demand
HDPE has had a vey mixed picture recently with probably the most volatile pricing of all the Polyolefin grades.
HDPE injection dropped towards the end of September on plentiful supply but appears to have rallied strongly at the start of October increasing by £50-70 / MT.
HD Film appears a little more balanced and is increasing by more moderate amounts but from a higher starting point. Blow Moulding grades also seem to be seeing stronger demand and increases of £40-60 / MT reflect this.
What is clear on all HD grades is the very low spot offers for volume available in September and no longer there as low cost imports available for immediate delivery are not there.
PP
Supply
Demand
Having been under great pressure since the summer, PP finally stopped falling and started a mini recovery in October with the first increases in PP Homopolymer reported since April.
Whilst demand is still weak, there was enough resistance from major European producers to stop the downward trend and achieve some small increases. Prices rose by €20-50 / MT with increases in £ higher because of exchange rates.
Demand is still an issue with key industries (Consumer goods, Automotive etc.) still in the doldrums. Outlook for November is uncertain, with major producers continuing to bemoan the losses they continue to make suggesting that they will continue to push for increases even in a subdued market.
Other Polyolefins
EVA pricing was mixed with some revising pricing down to market levels whilst others sought increases to mitigate higher production costs.
Speciality PP grades were mixed, with the link to monomers breaking and producers seeking rollover to small increases. As ever, higher production costs were cited as the reason.
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
SM crashed down by a further €287/T in September. Generally, due to poor demand, this reduction was passed on in full for PS. Monomer and polymer supply outstripped demand, despite producers cutting supply to avoid overproduction.
In October, the downward trend of SM ended, with a small but significant increase of €9/T. Supply and demand are mirroring August. PS production has been restrained, and industrial action is underway at a large EU PS producer.
ABS
Supply
Demand
September ABS prices fell by around €210/T, following the composite monomers (SM -€287/t, butadiene -€20/t, ACN -€71/t). Poor demand led to increased stock at suppliers, so no supply issues were seen.
October shows another fall in price (SM +€ 9/t, butadiene -€30/t, ACN -€ 33.50/t). ABS production is cut, and imported volumes will remain low as prices continue to fall. Risk of recession is making buyers very cautious
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
The very weak automotive sector is having an impact on pricing. With very little being moulded, most European production plants are only running at 60-70% of capacity. This cutback combined with increasing energy costs continue to push prices up. However, with weak demand it is expected that contracts will be easily fulfilled.
PA66
Supply
Demand
A similar picture to PA6, with higher energy costs announced and restricted capacity due to force majeures on some European plants, coupled with extremely low demand.
Greater imports arriving from Asia means that most will be able to fulfil their limited order books.
POM
Supply
Demand
European production has improved slightly, and with lower demand from the automotive and building sectors there is some downward pressure on pricing.
It is expected that prices will rollover for the month of October.
PC
Supply
Demand
The Benzene contract for October has settled €22/mt up on last month, and with higher energy costs it is expected that European prices will start to rise once more.
European production plants are still cutting back on output due to weaker demand in the market. Imports from Asia are on the rise and are at a lower price point, so this could halt opportunities for an increase in price.
More specialised grades are holding up due to restricted supply of intermediates, so prices for these remain high.
PMMA
Supply
Demand
Supply of MMA is still restricted and there are likely to be further increases into the final quarter of the year, due to this and energy costs.
PBT
Supply
Demand
European prices have increased into quarter four on the back of rising energy costs, however we are now starting to see much cheaper offerings from Asia, which could put pressure on the supply chain.
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 are still the norm for every polymer type.
