Weekly commodity price report

Short May for business, with question marks

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

• BRENT oil price 77.47 USD/barrel, increasing prices,
• EUR/USD: 1.1915, EURO getting weaker
• NAPHTHA: 660.11 USD/t, steeply increasing prices
• low demand

Polyolefin market is still unbalanced. Seemingly the price of HDPE will, after a long time, be again higher than that of LDPE. The materials imported from outside of Europe appearing in addition to the reduced demand for LDPE “virgin” grade reduce the prices. The PE capacities starting as of this summer, mainly in North-America will expectedly flood the European market. Probably the polymers from Iran being popular in our region disappear from the competition for a while, but the vacancy will certainly be filled by polymers from North-America. In this way oversupply will probably not drop but grow during the next years to come. In particular in case of LDPE and LLDPE grades. For the time being HDPE does not seem to be endangered. Yet supply is expected to grow here as well. 

In case of PP growing, unusually high prices cause trouble. Converters are willing to buy at these prices only quantities that are absolutely necessary. During last week spot propylene prices increased, while ethylene monomer price dropped. Early last week they even exceeded it. All this foreshadows the next months, slightly (+10-20€/t), but continuously, monthly increasing propylene monomer and polypropylene prices.  PPH prices catching up on PPC prices indicate the increase of C3 monomer prices. Now the price of more expensive PPH grades is higher than that of PPC.

The shift of price ratio that can be observed on the polyolefin market forces also converters to adapt themselves to the market.  In the short run the increase of spot purchases can be observed. Also abundant supply makes this possible. Buyers keep waiting until the final monthly price becomes visible and then they buy. Unfortunately polymer producers are also game, they reward surplus quantities with rebates. Due to this there is a continuous instability around the prices. This curbs the willingness to buy.  However in the long run for converters the reduction of price sensitivity will be a key issue. This in turn requires product development and product structure change.

The 40 EUR SM price reduction is not sufficient for converters. Therefore, for the time being demand is low. Yet there is nothing to wait for.  SM demand in Asia is growing, prices are increasing. In addition in Asia the maintenance season is at hand, and because of this monomer supply is expected to get shorter.  Because of the USD getting stronger also the quantity of the import PS drops. The gap between European prices and import prices is slowly closing.  Now it is a good idea to buy because of the dropping quantity of import from outside of Europe and due to the expected SM price increase.

Polyolefin grades

In case of LDPE producers tried to increase prices by 10-15 Euro, usually the final agreement came to be roll-over. But because of the lacking demand, also smaller discounts (by 10-20 Euro lower than prices in April) can be achieved in case of higher orders.  The offer price range is 1,090-1,190 €/t.  The problem is rather the multitude of smaller-larger traders who keep pushing prices down. Price reduction does not seem to stop in May either.

HDPE demand is good.  According to the report of CE HDPE producers they were at ease to sell quantities produced in May. HDPE BM and film grades are relatively short.  Most wanted grades are MDPE film grades, they are not to have on spot basis.  The typical price range is 1,140-1,200 €.  But the total price band is broader than this, but it is noteworthy that the tendency of HDPE shows clear price increase. Producers increased the price of HDPE pipe grades by 20-25 €, yet because of the low demand an increase by 0-15 € was accepted.  The typical price range is 1,350-1,420 €.

The price range of LLDPE C4 is 1,050-1,100 €, this means a price increase by 0-10 €. The USD getting stronger can be felt. Supply is broad, demand is good.   The price range in the other countries of the region is 1,080-1,170 €. 

mLLDPE prices increased by 10-20 € compared to last week. The typical price range is 1,240-1,320 €.  Supply is broad, demand is balanced. There are many grades on the market, more advanced ones are in a price range higher than 1,300 €, while older grades and premarketing products are in a range of 1,240-1,280 €/t.

PPH prices are increasing, producers increased prices in line with their price level.  WE producers managed to increase their CE prices by 0-10 €.  But regional producers, those in particular, whose price level was low, managed to implement a price increase by 20-30 €.  The price of PPH Raffia grades in Poland is in a range of 1,140-1,190 €, and 1,150-1,190 € in the other countries of the region.  The price range of PPH IM grades is 1,150-1,230 €, depending on the grade, producer, application area and melt index.  Because of the high prices demand is lagging behind the usual level.

PPC was offered in a range of 1,200-1,310 €/t in the region last week.  However the price situation is “fishy” in Poland. There are many goods from various sources on the market. In this way PPC from Iran and South Korea is available at prices close to PPC 1,200 €.  But the normal price range is 1,240-1,290 €.  In the other countries of the region the price range starts from 1,250 € and exceeds even 1,300 €.  The price increase is palpable, the producers of commodity plastics finished products are confident that prices would drop, yet chances for this are low in the short run. 

On the PPR market the typical price range is 1,280-1,350 €.  In Poland PPR is available from 1,260 €, but typical prices are rather on a level of about 1,300 €.  Like PPC demand is not high.

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

Polystyrene grades

EPS demand is not yet too high.  For the time being the boom of the construction sector cannot be felt yet. Though construction season will start only as late as June. Therefore EPS producers were forced to give further discount to converters to boost demand.  This was as high as 120 € in Hungary.  The typical price range is 1,500-1,550 €.  In the other countries of the region this is rather by 50-60 € higher.  However it is true everywhere that demand is lower than expected.

The demand for GPPS and HIPS is not too high.  Sellers complain about the price sensitivity of buyers. Importers increased prices last week, the price of GPPS from Russian import exceeded 1,300 €. GPPS imported from Iran is rather in a range of 1,330-1,350 €.  Because of the USD getting stronger the quantity of import arriving is lower. But also the prices of European polymer producers vary, in case of GPPS in a range of 1,350-1,440 € and in case of HIPS in a range of 1,390-1,530

The general price level is all in all expected to follow monomer prices. But this means that European producers first decrease their prices at a rate lower than the SM price change, while importers will increase prices. This will result in the price range getting narrower and in the closing gap between prices. This process is now halted only by the ingress of Russian import, which keeps GPPS prices below 1,300 €/t, what is more, in Serbia the price of GPPS is below 1,250 €/t.  The typical GPPS price range is 1,330-1,450 €, and that of HIPS is 1,390-1,550 €/t and in case of certain grades this is even as high as 1,600 Euro. With regard to HIPS this absolutely means a price increase that next July Synthos will not produce HIPS because of maintenance. In case the import supply from outside of Europe expected to get shorter and increasing SM price will be added to this, then also significant jumps are possible in the price of HIPS.