Weekly commodity price report

The following factors influenced “commodity” polymer prices and price expectations last week:

• BRENT oil price 64.37 USD/barrel, increasing prices,
• EUR/USD: 1.2331, strong Euro
• NAPHTHA: 554.38 USD/t, slightly increasing prices
• Monomer price changes:
• SM: +55 €/t,
• Ethylene (C2): -20 EUR/t,
• Propylene (C3): -23 EUR/t,
• Low demand, excellent market,

Olefin prices dropped: that of ethylene by 20, and the one of propylene by 23 Euro. This is unusual in March. The agreeing parties justified their decision with dropping crude oil and naphtha prices. Most polymer producers will publish their prices as late as on March 5.  Yet first-hand orientation trials have already started. Polymer producers would not like to reduce prices beyond the significant monomer price change. They are rather willing to accept roll-over and reduce prices by 10-15 Euro. In particular as of April all expect increasing prices. Some converters, who can afford to sit and wait, will postpone the bargaining process till the second week of March in the hope for a price reduction following monomer prices. Yet in the countries where supply is broad, in Poland for example, probably the complete monomer price reduction will be accepted on the market. While pricing in the central region (MCE) is rather customized to the individual customers, price correction will be typical in case of polyolefin grades. PE supply and prices in the southern region (SCE) are determined by the one month’s shutdown of HIP-Petrohemija starting in the middle of April. In this way, because of the preparation for the shutdown, HIP-Petrohemija sells less products on the market. In this way HIP-Petrohemija can leave prices unchanged during the first week of March. The big question is, what is going to happen to the large CE producers. They will probably curb price reduction. They will customize their pricing to the individual buyers, sometimes combined with a price cut following monomer prices. Yet if they are careful enough about their pricing, they can reduce the price difference of 50-60 € by using WE prices.  However in Poland, because of the significant oversupply, prices will probably drop, following monomer prices, both with regard to PE and PP. In case of PP it is a real danger that PPC and PPR supply will drop. The significant price difference between North-American and European prices has grown further in March, in this way prompting producers to export their products. This might result in the European supply getting shorter. In case of PP shorter supply was palpable as early as at the end of February. Because of this waiting for too long can cause supply problems in the second half of March.

Styrene monomer price increase (+55 €/t) is in line with the expectations. Polymer producers reacted in the way described in the big book, by increasing prices exceeding monomer prices. This will expectedly be realized in case of HIPS and EPS, while this is not probable in case of GPPS.

Polyolefin grades

Though the inventories of LDPE producers have dropped, yet there is still selling pressure.  Large producers in Central Europe already offer their products to distributors at prices by 20 € cheaper.  In case of direct buyers custom-pricing will be typical. We expect Polish LDPE prices in a range of 1,140-1,180 €. In the other countries of the region prices in a range of 1,160-1,200 € will be typical, depending on the grade and buyer.  In this way there will be converters experiencing roll-over and others experience slight decrease. However the price of polymers will not drop by more than 20 € on average. What is more, in the second half of the month demand might become more dynamic, because of the expected price increase linked to the actual season start in April.

The demand for HDPE FILM grades became dynamic. The typical price range was 1,080-1,160 € depending on the grade and producer. Prices are expected to change not exceeding monomer price decrease.  In Poland we expect prices in case of FIL grades to be in a range of 1,040-1,120, in case of  BM grades 1,040-1,100 and in case of IM grades 1,020-1,100 €/t. In the other part of Central-Europe average prices might be by some 20 € higher than this.  Good news is that in the southern region we do not expect price reduction, we expect roll-over, which will equalize regional price differences. The intentions of the Czech producers are not clear yet, here it is possible that the price of simpler IM grades will drop below 1,000 € in case of some buyers, distributors.

The producers of HDPE Pipe (100) grades prepare for roll-over. The expected price range will be 1,350-1,480 €. Large buyers have already procured the feedstock needed for the first half of the season, it is no longer possible to boost their high demand using pricing tools. Smaller converters are forced to buy.

LLDPE C4 prices dropped and will drop, we measured prices in a range of 1,100-1,180 €. But because of the strong Euro, importers are able to further reduce their prices, in this way the CE price range is expected to be 1,080-1,160 € in March.  The cheapest is still Poland with a price range of 1,080-1,140 € while in the other parts of Central-Europe the typical price range will be 1,120-1,160 Euro.

We also expect mLLDPE prices to drop, a price range of 1,240-1300 € will be typical.  Demand is good.

On the CE PPH market torn into two halves the monomer price drop allows the prices of imported and locally produced materials to come closer to each other.  But CE producers have set a goal to carry out just a moderate price reduction by 10-15 € only and some producers even would like to keep up the price level achieved by the end of February.

Last week the range of lowest offers in case of Raffia grades from Iran was 1,030-1,060 €.  But the typical price level is 1,100-1,200 € in Poland, while 1,130-1,220 € in the other CE countries. Prices drop by 0-20 €/customer, depending on the grade and buyer size.  As of the second half of March we expect demand to rise dynamically and increasing prices.

In case of PPC we anticipate rather unchanged prices.  Prices in WE are much higher and demand is good as well. In this way, from there, no significant material inflow can be anticipated. CE producers rather struggle with stock and allocation shortage. The availability of cheap materials from South-Korea and Iran is limited.  The monomer price decrease is a good occasion for the WE and CE prices to come closer.  Yet in Poland price reduction in the higher price category will be almost certainly needed, here we expect a price range of 1,220-1,260 Euro.  In other parts of Central-Europe rather prices in a range of 1,260-1,290 Euro are typical.

On the PPR market prices were typically higher than 1300 € last week, but exceed the level of 1,400 € just in case of some products. Supply is short, there is not much material on the market. We expect slightly decreasing prices (0-20 €/t) in March.

The prices of the last week are presented in the table below (full truck load 20-22.5 t):

Polystyrene grades

If also the weather will allow, the EPS market will become highly dynamic in March.  The increase of SM by 55 € will set the direction.  Polymer producers, in the light of the season, will probably try a “monomer +” price increase. That is to increase prices by 60-80 €.  Probably they will realize this in case of some buyers, but with regard to the market as a whole, we expect on the average a price increase following monomer prices and price band movements.

The demand for GPPS and HIPS is low. Import from Iran and Russia is still missing from the market. This is palpable in case of HIPS in particular, European supply is rather low. Due to this European polymer producers declared a GPPS price increase following monomer prices and a HIPS price increase by 100 Euro. However prices will be final as late as next week.  This is influenced also by the fact that importers expect the arrival of major shipments in March, which might curb the aggressive European intention to increase prices.