Weekly commodity price report

Waiting

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

• short workweek because of Easter,
• waiting came to be general on the polymer market, converters wait for better, cheaper prices in May,
• therefore the demand is low,
• the inventory level of polyolefin converters is high,
• fluctuating BRENT oil price again lower than 55 USD,
• import from outside of Europe appeared again, but this quantity is not yet high,
• dropping Asian monomer and polymer prices,
• weak Euro,
• in spite of the maintenance season stable monomer and propylene supply.

In detail

Europe closed a short week again, partially this is the reason why there was silence on the market. There were just a few orders, new deals made both in case of polyolefin and polystyrene grades. Buyers came to be uncertain. In case of polyolefin grades the questions is where monomer and polymer prices are going to turn, while in case of polystyrene grades the further price drop is not a question, but the rate of the price reduction is still not clear.

The demand for plastic semi-finished and finished products is similar to last year, but the demand and consumption are not growing. As one of our partners said:” I almost sell by the piece the same amount as last year.” But supply is increasing in Central Europe. New players, new traders appeared on the scene. Increasing supply and stagnating demand together make the market uncertain. As a result the increase of prices came to a halt in Central Europe.

Uncertainty is enhanced by fluctuating oil prices and also there are also major movements in the EUR exchange rate.  Monomer and polymer prices were detached from the crude oil prices as early as in 2015, in this way it is hard to draw conclusions from the movement of the same. The last 2 years were a golden age in the life of polymer and monomer producers, they produced a margin increase never seen before. But the market is tired, converters do not believe any more that supply would be uncertain because of maintenance, they are not willing to buy in advance driven by speculation. It is no longer possible to further increase the prices in the old way. Also the acceptance of high prices by their buyers is decreasing.

Fatigue and uncertainty prompts buyers to keep waiting for a clear price tendency. In this way, until the end of April the Central European market will remain silent. The change of prices will still be influenced by the change of monomer prices most, where major monthly jumps shall hopefully not be anticipated any more.  But expectedly polymer producers will be sooner or later be forced to decrease the “spread” to hand over some profit to plastic converters.

Polyolefin grades

During the last 2 weeks, with the exception of PPH BOPP graded, there was nothing in short supply. The LDPE market was stabilized, short supply stopped, the typical price range is 1,300-1,330 €/t.  There are many offers, first of all from traders, but buyers keep waiting. By May the markets expect roll-over, a slight price drop (-10-30 €).

The HDPE pipe market is stable and strong, this was the only HDPE grade which was able to reach a slight price increase (by 10-15 EUR). But Film, Blowing and Injection Molding grades are over-supplied and lacking demand at the same time. In spite of this we experienced no major price reduction. The lowest HDPE price is still at about 1,160 €.  The market takes the price reduction in May and in case of monomer price increase the reduction of “spread” almost for granted. However HDPE 100 grades are expected to keep their prices stable also in May. In case of this grade it can be also anticipated that demand will grow.

In case of PPH the situation is similar to HDPE, low demand, stable supply, but polymer producers keep the prices. PPH prices will not drop below a price range of 1,190-1,200 EUR. The typical price range is 1,200-1,250 €. The market expects price reduction, but first of all the reduction of polymer producer’s “spread”.

The situation is interesting in case of PPC, as even back in March plastic converters reported short supply. But now there are signs of oversupply which in reality is lacking demand. Surprised polymer producers and distributors started to decrease prices slightly, on the markets of our region PPC IM grades are offered at prices starting from 1,280 €, the typical price range was 1,290-1,330 € last week. 

PPR has been stable for months, supply and demand are balanced, the typical buying price range was 1,320-1,380 € last week.

In case of LLDPE C4 the market situation is unchanged, the typical price range is 1,240-1,280 €/t. The market expects increasing import supply and dropping prices.

The downturn of the demand in case of polyolefin grades, LDPE and PPC in particular, is due to the fact that converters anticipated continuous price increase and short supply in April and May. Accordingly they stockpiled high safety inventories. But in case of these two grades, on the CE market there was practically a roll-over in April and also the erosion of prices has started. In this way converters became uncertain.  Now they play a safety game, they try to utilize their “expensive” inventories before the collapse of prices. Or if prices increase, then they will pass on such increase.

Prices will not collapse in May either, but the continuous price increase of the last 2 years and the increase of the “spread” has made polymer producers and traders also psychologically tired. Some larger WE producers started a cautious price decrease on the CE market, first of all in case of PPC. But it is almost impossible to sell at any price. Converters wait for a clear market and price trend. The polyolefin market has “frozen” last week. However, in our opinion, the uncertain price situation will prevail in May as well, polymer prices will not change significantly, slight drop (-30 €) and a minor increase (+25 EUR) is possible, depending on the polymer grade concerned.

The prices of the last two weeks are presented in the table below:

Polystyrene grades

Waiting is typical on the polystyrene market as well, the demand is not low, but every buyer buys only the quantities needed. Demand in April is similar to that in March, when, due to the high prices buyers did not buy. Now they do the same, because they expect dropping prices. SM and polystyrene price reduction seems to be clear for all players. Polymer producers did not report selling difficulties. This is mainly due to the low quantities imported from outside of Europe and from Russia.

On the GPPS market the demand is a little bit lower than what we are used to in April. The typical range of buying prices is: 1,520-1,580 €/t

HIPS supply is still low; accordingly also the typical price range is 1,680-1,750 EUR.

In case of ESP most deals were made before Easter, at that time the typical price range was 1,530-1,570 €. 

In spite of the expected price reduction no major “spread” reduction is to be expected from the side of polymer producers. Only major incoming import shipments can change this situation, but there is no chance they would arrive before the middle of May.