Weekly commodity price report

Roll over and drop II.

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

• converters hope that prices will drop further,
• supply is balanced,
• converters have reduced the level of their purchases,
• converters try using their old stocks,
• therefore the demand is low,
• there are uncertain oil price movements: BRENT oil price,
• EUR getting stronger
• cracker shutdowns at the largest CE polymer producer,
• spot SM price close to 1,000 €.

In detail

Erratic April is followed by weird May. Polymer prices started dropping in spite of being in the middle of the annual main season. In case of polyolefin grades we measured an average price drop by 20-30 EUR, while in case of polystyrene grades we measured a price drop by 200 EUR on the average or in many cases even higher. 

Feedstock producers and traders complain about lacking demand. Converters do no produce less than last year, even packaging material producers reported a good volume of orders in line with the season. On the other hand converters really buy less. The reason is that in March still everyone hoped that the price tendency would be permanently increasing until the end of June. Accordingly they have purchased in advance. But early April the situation has changed and prices have started falling unexpectedly. Now the price drop seems to prevail for the next 2-3 months. In this way converters try consuming their “old, expensive” inventories. Because of the balanced supply seeming to be stable and due to the continuously dropping process they do not hurry with their purchases either. Polymer producers and traders consider this situation as lacking demand. This prompts them to further price discounts.

Only the reversal of the price tendency, a new increase or the collapse of the safe supply can induce a change. By accident all three crackers were shut down at the largest polyolefin producer of Central Europe. They are expected to restart production within a short time. But this event reduces the supply at any rate. But in case of PS the market is not so fortunate. The reduction of the styrene monomer prices seems to be unstoppable. The difference between the May “contract” and spot price is 130 €.  Though the market considers dropping prices as correction, this reflects rather the picture of an “extreme”, hardly settling volatility.

Polyolefin grades

The market accepted in general a price drop by 20-40 €.  Polyolefin prices started have started a slow reduction.

There was a low demand for LDPE as well on all markets. We have measured the cheapest prices in the southern part of Central Europe (1,270 € -1,280 €). Supply is good and balanced. Going to the north prices increase, the average price is at about 1,290-1,340 € (full truck load). The price range in Poland and in the Baltic states is 1,290-1,350 EUR. We do not expect a further major price decrease during the month, as at the largest regional LDPE producer the order books have been closed as early as on the 11th, and as due to the short incident supply dropped further.

HDPE supply is abundant. But demand is, like the whole year so far, is lower than usual. Also here we have measured the lowest prices in the southern region (HDPE BM and FILM, 1,150-1,190 €/ton) this price range is in the other parts of Central Europe, including Poland, 1,200 -1,300 €/ton. The price depends on the grade and on the size of the buyer. HDPE pipe (100) prices show stability, their price range is 1,350-1,450 €/ton in each region.

The price range of LLDPE C4 is 1,190-1,260 €/ton in the region with the highest consumption.  In each region. However supply is low.  Many consumers did not even get offers from their usual suppliers. The price range of materials of Central-Eastern origin is 1,190-1,220 EUR, the price range of materials from America is 1,200-1,250 €. Traders offer their products in a price range of 1,230-1,260.  The price of mLLDPE is stable within a price range of 1,350-1,360 €, the supply is good.

We have measured the lowest PPH prices in the southern region, in Serbia and Romania, within a price range of 1,130-1,200 €/ton.  Low-priced quantities from 2 weeks ago (1,100 €/ton) were sold out, the market situation came back to normal.  In Poland and in the northern region we saw similarly low prices. The typical price range is 1,140-1,200 €/ton, the prices of traders are by some 20 € higher.  In the central region the price range is 1,150-1,230 €, depending on the grade.  Supply is very good, but demand is low. A further slow price decrease is probable.

PPC prices also underwent a downward correction.  The typical price range is 1,260-1,300 € in the region.  But in Poland, from sources located in the Far-East, traders offer PP copolymer grades within a price range of 1,220-1,240 EUR.  Polish contracted buyers now are worse off than spot buyers. Demand is low, a further general price drop is to be expected during May. PPC consumers, first of all in the packaging industry, think that a price range of 1,180-1,200 € is ideal.  In June prices will expectedly also reach this level.

PPR supply is stable and good, prices keep the +40 EUR price premium. The typical price range is: 1,280-1,360 €, the prices of traders and those of minor buyers can differ from this by 20-60 €, depending on the grade.

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

Polystyrene grades

The steep monomer price drop seemingly does not stop. Price reduction will continue further in June according to the opinion of the market players. This assumption highly determines the activity of the market. Demand in May is here also lower than during the previous years.

In case of EPS the typical price range is 1,300-1,350 € in Central Europe.  The demand for finished goods is lower than last year. The reason is the price of finished products still being high. The reduction of the price of EPS heat insulation sheets is expected to result in the enlivenment of the demand. Major price drop is no longer to be expected in May.

GPPS prices dropped significantly during the last two weeks.  Italian prices at about 1,250 €/ton appeared also in Central Europe.  But for the time being the price range is extremely broad, the top of it is at about 1,380 €. Because of the good supply and low demand, and due to the price reduction expectations it is anticipated that the two extreme values of the price range will get closer to each other and the top price will drop dramatically in May.

In case of HIPS demand is good and there is a slight oversupply.  The typical price range is 1,390-1,430 €/ton. The prices of traders are by 30-40 € higher than this.  A slow price erosion is possible in May.

Polystyrene market is still uncertain. Prices will certainly drop in June as well. But the price of SM can start increasing soon, as benzene SM spread drops below 250 €/ton, resulting in the reduction of SM release and in the increase of prices.  This is expected to take place still in the summer, generating another wave of increasing prices.