Weekly commodity price report

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

• BRENT oil price 78.51 USD/barrel, increasing prices,
• EUR/USD: 1.1771, EURO getting weaker
• NAPHTHA: 668.31 USD/t, increasing prices
• demand not in line with expectations

Polyolefin producers and traders expected a higher demand in May. In spite of the fact that with the exception of LDPE there is no reason to complain about lacking demand. What is more, demand for HDPE and PPH is particularly good, in certain regions supply is limited and certain HDPE grades are short of supply.  Yet sellers have been waiting for the usual spiral of increasing prices and buying in advance.  As it happened 2015 and 2016 as well. Converters started as of 2017 to get used to the continuous, good supply of almost all product lines.  Due to this they have the feeling that it is sufficient to buy just the absolutely necessary quantities at the beginning of the month, and they can purchase the rest any time, goods are available. This changed behavior influences sellers as well. As this quantitative pressure is continuous, at the end of the month producers sell higher quantities at special (particularly low) prices to traders and large converters.  In many cases this turns also producers into traders. This has two major impacts on the market.  On one hand this makes the price increase at the beginning of the month in case of critical (e.g. LDPE) grades with low demand impossible.  This is how retained demand and low price level are preserved. On the other hand this makes life impossible for traditional distributors and distribution channels. In most cases the prices of contracted distributors are by 40-50 € higher than the market price level.  This in turn results in the reduction of the calculability, predictability of the polyolefin market.  The increase of the ratio of spot-based purchases intensifies the price competition on the market and increases as a self-generating spiral, the ratio of spot purchases. This is a typical tendency not only in Central-Europe but in Western-Europe as well. This is also where this phenomena stems from. A significant part of the cheap LDPE and PPC flowing to the CE market arrives via traders from WE.  For the time being the ratio of import from overseas is low.

Because of the aforementioned points converters do not expect significant price increase in June, in spite of the continuously increasing oil and naphtha prices. They hope that the quantitative pressure sellers are exposed to will keep the price level. Yet in June significant (+30-50 €/t) monomer price increase can be expected.  This compels also producers to increase prices. Such a significant increase can also boost the willingness to buy in advance. In this way it can happen that a spiral characterized by increasing prices and increasing demand will develop in the summer, just like last year.

The PS market came to be dynamic last week, in all three segments examined by us. Buyers are increasingly aware of the fact that in June monomer price increase and a price turn can be expected. In addition, the quantity of materials imported from outside of Europe us low, and the price is not much lower than that of materials from Europe.

Polyolefin grades

LDPE cannot recover.  But demand is still low, retained.  Polymer producers face a high quantitative pressure. Almost every producer tries to place, by offering special prices, high quantities with large converters or traders. Normal offer price range is 1,070-1,190 €/t.  But these prices are eroding. In case of buying extra quantities even a discount by 20-30 € is attainable.  We do not expect change on the market in June either. There is a high quantity of polymer sold at cheap prices in the warehouses curbing price increase by producers.

Yet HDPE demand is absolutely good.  What is more, there is rather a shortage of HDPE Film and BM grades. MDPE is sold out. The price range is 1,110-1,200 € depending on the grade and application area. Also the HDPE (100) pipe market is a good performer, prices are stable, the typical price range is 1,350-1,440 €.  In June there are chances for a price increase following monomer prices.

The price range of LLDPE C4 in Poland is 1,040-1100 €, this means a slight drop compared to the last week and is absolutely identical with the price range of in April.  Because of the abundant supply it is hard to sell, in spite of the demand being good.  The price range in the other countries of the region is 1,080-1,170 €. 

 mLLDPE prices did not change compared to last week. The typical price range is 1,240-1,320 €.  Supply is broad, demand is balanced.

PPH prices keep on increasing, demand is particularly good, first of all in case of PPH Raffia grades.  The price of PPH Raffia grades in Poland is in a range of 1,140-1,190 €, and 1,170-1,190 € in the other countries of the region.  Even the two minor SCE producers were able to increase its prices by 10-20 € last week.  The price range of PPH IM grades is 1,150-1,230 €, depending on the grade, producer, application area and melt index.  In spite of the high prices demand is good. On one hand buyers feel that the availability of goods is dropping and by June an increase by even as much as 30-50 € can be expected. 

In case of PPC there is a slight oversupply,   due to the goods streaming back from WE.  PPC was offered in a range of 1,200-1,310 €/t in Poland last week.  In the other parts of Central-Europe the price range is 1,260-1,320 €. In the other countries of the region the price range starts from 1,250 € and exceeds even 1300 €.  Demand is good and it is expected to get stronger.  Though Polish converters are confident that they will get further good offers at Plastpol.

On the PPR market the price range is 1,280-1,350 €.  In Poland PPR is available from 1,270 €, but typical prices are rather on a level higher than 1,300 €.  The level of demand is average.

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

Polystyrene grades

EPS demand is getting stronger.  The season is at hand and so is a potential SM price increase.  Based on the investment projects started it is easy to see that we can anticipate a strong EPS insulation season as of July.   The typical price range is 1,500-1,620 €.  Some larger converters can buy also on levels below 1,500 €.

The demand for GPPS and HIPS is growing. The USD getting stronger results in the increase of the price of goods imported from outside of Europe. All in all the quantity on the market is low. The price of GPPS imported from Russia and Iran is rather in a range of 1,330-1,350 €.  But also the prices of European polymer producers show a high variation, 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.  We anticipate growing demand and increasing prices.