Weekly commodity price report

Unusually low demand in the main season,

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

• BRENT oil price 74.26 USD/barrel, increasing prices,
• EUR/USD: 1.2288, strong Euro
• NAPHTHA: 603.88.73 USD/t, increasing prices
• Low demand

A weird situation occurred in the main season. There is no demand, some PPC, PPR, PPH and HDPE grades are short of supply, converters anticipate the price increase, but for the time being they do not accept it. The market and the demand are still stagnating In the meantime oil and naphtha prices are increasing.  Polymer producers are under double pressure.  On one hand increasing costs generate price increase constraint, on the other hand they have to keep selling because of the continuous production.  In the meantime margins are getting continuously smaller, and in case of those who produce from purchased monomer they are already in the negative range.  Probably this is the reason for the shutdown of Rompetrol and HIPOL last week. Non-integrated producers with lower capacities cannot finance the present situation any longer. A part of the producers outside of Europe has retained their LDPE, PPH and LLDPE supply because of the low prices. Traders and distributors buy less because of the low demand and because of the unpredictable price movements. Plastic converters are precautious, experiences this year show that prices are capable of dropping also in the season. Some of them buy less than what they consume, reducing their feedstock inventories. For the time being everything seems to be in sufficient supply.  In our opinion the supply only seems to be abundant. Would converters start buying, it would become visible at once that there is shortage in some segments.  Because of the present shutdowns and the reduced import by early May supply will get shorter. The summer maintenance season is also at hand. In this way, by the summer, in addition to the low inventory levels of the converters a relatively short supply might result in a steep, sudden price increase as of June. This is hard to believe on the basis of the experiences of the last six months, the behavior of buyers can change quickly. In the southern region there is no sufficient PPH Raffia grade, the bottom of the PPC price range is also slowly being pushed upwards. Certain PPR and HDPE (MDPE) grades are short of supply as early as now. The increase of feedstock prices certainly means the increase of monomer and polymer prices in May.

PS market is characterized by low supply. Converters are confident that SM price would drop further in May.  At the present this expectations is supported by the fact that China, as early as in February, imposed 5-10.7% antidumping duties on SM from Taiwan, South-Korea and North-America. This might direct these quantities towards Europe and this might reduce prices. In this way in May even a price drop by 40-60 € SM is possible.  This will have two effects. First, it will reduce PS prices and then the low PS price will probably reduce the import from outside of Europe. At least in May.  For the time being a part of PS importers are panicking and try to sell now before further price drops.  But as of the summer we anticipate further polymer price increase first of all with regard to the construction and packaging applications.

The summer and vacation season does not seem to be quiet at all neither in case of polyolefin nor in case of polystyrene grades. As a result of the present behavior of the market players sudden price movements and in certain segments also polymer shortage are possible.

Polyolefin grades

LDPE hitting rock bottom does not seem to end.  The typical price range is 1,100-1,150 €. As the inventories of producers are high and at the present there are no real signs of the demand livening up in May.  In this way during the week ahead supply pressure will grow, which might mean individual offers and within them also a price drop by  10-20 €.  This despite of the fact that in May a monomer price increase by about 20 Euro and a polymer price increase following the monomer price increase can be expected. 

In case of HDPE there is still relative shortage on the market.  MDPE grades have almost completely disappeared. Also HDPE BM grades are of short supply.  For the time being the availability of HDPE IM and FILM grades is good.  It is due to the broad import supply from outside of Europe, first of all from Iran and from the Ukraine, that in Poland there is still HDPE to have below  1,100 €.  

In the central and southern region prices seem to increase. Or the bottom of the price ranges. Here we have measured prices in a range of 1,100-1,180 €.  This is first of all due to the short supply resulting from the maintenance of HIP-Petrohemija.

HDPE pipe (100) demand is low.  The official price range is 1,350-1,460 €. Yet there are also actual transactions at about 1,300 €/t or below that.

The dropping of LLDPE C4 prices has stopped.  In Poland the typical price range is 1,050-1,100 € and 1,080-1,150 € in the other countries of the region.  Supply is good and broad.

 mLLDPE prices did not change compared to last week. The typical price range is 1,220-1,260 €.  In Poland the typical price range is already 1,200-1,260 €.

PPH price reduction came to a halt.  What is more, due to the shutdowns (Rompetrol, HIPOL) there was a slight increase last week. The typical price range is 1,120-1,180 €, depending on the grade, application area and melt index. Yet certain traders in the southern region still offer PPH IM grades in a range of 1,080-1,100 €. There is a relative shortage of PPH Raffia grades, their price exceeds everywhere the level of 1,120 €. We think that by next week cheap inventories will be sold out and the general price level will increase.

In case of PPC the balance between supply and demand is slowly being restored.  After the general price increase following monomer prices the price were fixed in a range of 1,230-1,270.   Cheaper lots were sold last week. Only the materials from Iran is available in Poland at cheaper price, in a range of 1,190-1,220 €/ton.  On the market the balance of supply and demand might be restored by the end of the month and because of the effect of the monomer polymer price increase expected in May pre-purchases might start and might also make the accumulated inventories of traders disappear.

On the PPR market the typical price range is 1,260-1,350 €.  Demand is balanced, not too high, compared to the season. Some sheet (packaging material) grades are short in the central and southern region.

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

Polystyrene grades

The demand of EPS converters is still low.  Partially they keep waiting, partially they also have less orders. Price became stable by April. European producer prices vary typically in a range of 1,650-1,700 €.  But large converters also reported price below 1,600 €. Because of the generally expected price reduction in May it is possible that the present price range of 1,650-1,700 €/t will drop by even as much as 50 €, following the price tendencies being valid for large consumers.

GPPS and HIPS price ranges are narrow, in case of GPPS the price range is 1,300-1,450 € while in case of HIPS 1,350-1,500 €.   In the southern region we have measured the bottom of the price range which applies to materials from Iran and Egypt. But a medium-sized importer offers its products at a price of about 1,300 €/t, being afraid of a more significant price drop in May.  A general experience is that the difference between products imported from outside of Europe and produced in Europe is 80-100 €.  The price gap closed. The PS producer in Iran, learning from the experience of the last year, is willing to sell its new shipments at increased prices only. It does not want to become the cheapest player on the market.