Weekly commodity price report

Polyolefin price correction in July

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

• clear PE and PP price reduction
• dynamic demand,
• BRENT oil price 46.71 USD/barrel, tendency of  fluctuating prices,
• EUR getting stronger, EUR/USD exchange rate permanently close to 1.14
• SM price increase by 27.5 €.

In detail

According to the players of the polyolefin market prices at last hit bottom in July. At least the demand getting dynamic last week was a proof for this. The fact that two or three producers have used the monomer price increase that came to be higher than expected to correct their prices that stuck high contributed significantly to this.  Due to this for example in Hungary the prices of local producers at last came to be on a level identical with the average prices of Central-Europe. The summer season which traditionally means lower demand plays a major role in the correction. After the low demand in May and June a weak July would have meant the disastrous collapse of the prices. Therefore in July it seems to be expedient to boost the demand, to make converters buy more than what they normally need in July. This seems to succeed. The majority of converters thinks that it is time to buy, to fill the stocks at the lowest price in this year. Even if price reduction continues in August, but by September everyone thinks a turnaround with increasing prices will happen.

Some producers even went further and have planned to sell extra quantities in July, to the debit of their inventories and of their production in August. All this because they were afraid that the traditionally weak August will be even weaker after the “large-scale purchases” in July.

In case of polystyrene the picture is not yet clear. One thing is sure SM price increase continued (+27.5 €). But this does not mean an automatic price increase, partially because of the low summer demand and partially due to the significant GPPS, HIPS import.

Polyolefin grades

LDPE has hit reached the bottom of the prices of this year, at least in the opinion of the market.  The price range is much narrower, 1,110-1,220 €.   The difference between the prices of big and the smallest converters is hardly 120 €.  This small difference is expected to make also smaller converters buy.

For the time being there is and expectedly there will be no HDPE price below 1000 € in July either.  Prices dropped by 30-50 €, which was in line with the expectations.  Prices vary within a range of 1,000-1,200 €, depending on the grade. The broader grade assortment and broader usability are the reason for the broader price range. But if we check identical areas of use only, the price range is only 100-120 € broad. It is important to note that typical HDPE prices are below 1,100 € and most sales to medium-sized and big buyers take place at about 1,050 €.

The pipe market is dynamic, demand is high in Central and Western Europe as well. Prices did not follow monomer prices, there was typically a price drop by 20-30 €.

The price of LLDPE C4 dropped by 50-60 € early last week.  Then it increased again, mainly on the Polish market by 20 €.  The reason is that availability is still weak. For the time being only SABIC seems to be able to supply significant quantities to the market, while the demand is high. LLDPE producers focus mainly on the contracted regular buyers and have sold everything as early as early last week. This was a great opportunity for traders to increase their prices.

mLLDPE is available within a price range of 1,180-1,230 €.

PPH demand is good, high, there is an average price drop by 50 €. Prices for medium-sized and small buyers are still higher than 1,000 €, but some buyers buying several thousand tons have already broken the limit of 1,000 €. Prices attainable for all are within a range of 1,020-1,100 € both in case of raffia and IM.

PPC prices underwent a major correction as well.  Some producers have corrected prices similar to LDPE, which was in some cases as much as 100 €. The typical price range in Central-Europe is 1,100-1,200 €. The price premium for small buyers is only 20-30 € now. Several converters indicated that they would start significant purchases exceeding their needs still in July.

In case of PPR prices there were no surprises, prices followed monomer prices. Depending on the grade, the new prices are within a range of 1,150-1,220 €.

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

Polystyrene grades

The styrene monomer price increased by 27.5 €, continuing the trends of the last month, but polymer prices are still uncertain.  Because of the summer season it is not probable that the price increase would be accepted, not even in case of EPS, where the season of insulation materials is just starting.

EPS -  so far polymer producers reported a price change from roll-over to 30 €.  As last week converters have just evaluated the offers, there were just a few deals made. The increase by 30 € will expectedly not be enforced, but the price will certainly increase by 0-20 €.  Now this is good for producers and converters alike. Demand getting stronger and prices getting higher. The typical price range will be 1,320-1,400 €.

GPPS demand is low, like in July, supply is broad.  However there are no final July prices yet. European producers try to increase prices by 30 €, but the expected final result will be within a range of 0-10 €.  As import supply is broad, EUR is strong, it is difficult to enforce any kind of price increase with the exception of the prices where substitutability is low. The typical price range is 1,230-1,300 €.

In case of HIPS demand is like in July, supply is stable.  Polymer producers tried to increase prices also here by 30 €, but HIPS from the Near-East is available even within a range of 1,250-1,300 €.  Typical HIPS prices of European origin are within a price range of 1,340-1,400 €, but special grades even exceed 1,450 €.