Polymers Continue to Increase in Price

Latest: Upward Price Trend Continues.

By David K Platt, Posted 21 April 2010

Buyers of standard thermoplastics were once again faced with sizeable price hikes in April. Higher feedstock costs, supply shortages arising from planned and unplanned plant outages and stronger seasonal demand conspired to support producers calls for price increases.

Shortages push L/LDPE higher

L/LDPE producers targeted price increases of €50/tonne last month to cover the €20/tonne rise in the April ethylene contract price and to make a contribution to margin improvement. LDPE film grades showed gains of around €40/tonne with LLDPE film gaining between €30-40/tonne.

LDPE availability remains tight due to a series of maintenance turnarounds at cracker and polymerisation plants. The shortage of C4 material, on the other hand, appears to be easing.

L/LDPE demand has steadily improved over the last three months with current orders outstripping the available supply, as industry stocks in the production chain, particularly for LDPE, remained low. Most suppliers still have customers on allocation.

Customers can expect no relied this month as producers are expected to push for even higher prices. LDPE supply will remain tight but there is likely to be more flexibility shown by LLDPE producers in price negotiations.

HDPE sellers manage small gains

HDPE producers initially called for price rises of €60/tonne in April but had to scale back their targeted increases as a result of growing customer resistance. They had hoped to recover the €20/tonne increase in the April C2 contract price and improve margins. By mid-month however, blow moulding and injection moulding grade prices were shoeing increases of around €20/tonne with blown film grades gaining €30/tonne.

Material availability was well balanced with most of the available output just sufficient to meet demand. Maintenance programmes at several cracker and polymerisation plants are restricting supply from local suppliers. There were also limited volumes of imported product to be found in the European market.

Demand continued to improve with better order intake from the building and packaging sectors.

PP soars

The continued shortages of C3 is restricting polypropylene production rates and leading to severe tightness in availability. PP producers had no trouble passing on the rise of €70/tonne in the cost of C3 in April, plus an additional €30/tonne. They had initially targeted price increases of up to €125/tonne. Securing sufficient material rather than negotiating a lower price appeared to be the main concern of converters last month.

Supply was hindered by a series of plant maintenance programmes and several force majeures being called. LyondellBasell however lifted the force majeure on PP homopolymer at Carrington, UK, on 6th April.

PP prices are widely predicted to rise again this month as C3 will remain tight.

PS matches cost surge

The styrene monomer (SM) contract price for April was surprisingly settled €103/tonne higher than the March level. PS producers immediately responded by raising their price target to an increase €110/tonne. Producers also targeted an increase in the GPPS/HIPS delta from €60/tonne to €80/tonne because of the surge of €225/tonne in the April butadiene contract price.

Converters who needed to buy had little option but to pay the prices being asked. There were however signs that many converters were running down their stocks in light of such high prices.

SM and PS supply will continue to be curtailed by plant maintenance turnarounds scheduled for May. One producer has decided to import SM from the US.

PVC falls short of target

PVC producers were desperate to secure profit margin improvement in April and announced planned price increases of up to €70/tonne. They were however soon forced to reduce asking prices to more realistic levels due to strong customer resistance and good material availability. By mid-April, notations were settling at between €20-30/tonne higher than at the end of March.

There was generally a good supply of material available and some producers were exporting significant volumes outside Europe. Supply is likely to become tighter as a number of plant maintenance turnarounds are scheduled for May.

PVC demand was livelier last month with a recovery in order intake from the pipe and profile sectors.

PVC sellers will be asking for further price increases this month to regain some of their dwindling profit margin. As material availability is expected to tighten and sales are on the upswing, their prospects of success appear to have improved.

Supply tightness lift PET

PET suppliers continued to push through price increases in April without too much difficulty as material availability tightened. Producers had targeted price hikes of €70/tonne to improve their profit margins, despite a modest rise in feedstock costs. The April paraxylene contract price was settled at €20/tonne higher with MEG down €29/tonne. Price increases of €30-40/tonne were easily achieved with some reports of settlements at close to the €70/tonne that producers had targeted.

Imported material is virtually non-existent due to global parity on raw materials and exchange rate movements. Concerns have also focused on the issue of European anti-dumping duty fees being introduced to prevent Middle Eastern importers from selling below-cost into Europe. A decision over the extent of the fee, expected to be made on June 1, will be retrospective and could affect any shipment to have arrived in Europe during the preceding six-month period.

PET producers are responding to the stronger demand by restarting some of the previously idled capacity. Artenius, for example, is due to restart plants at Wilton, UK and San Roque and El Prat in Spain this month.