Weekly commodity price report

The market anticipates price increase in September

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

• Europe on leave,
• BRENT oil price 51.03 USD/barrel,
• EUR slightly getting weaker, EUR/USD:  1.1739
• weak ethylene and propylene supply, increasing monomer spot prices,
• Low PS supply, in case of EPS in particular

In detail

Most market players take the price increases in September for granted. On one hand due to the “usual” annual rhythm, the increased demand in September. On the other hand also the circumstances of feedstock supply are decisive. The unexpected shutdown of the refinery of Shell in Rotterdam (Pernish) resulted in short monomer supply. This is now visible also on the increasing spot monomer prices. But according to the announcement of Shell by the end of the month most plant units will be restarted, which will bring the monomer supply in September back to normal. But polymer producers, for the time being, anticipate increasing monomer contract prices in September. Expectations are about an ethylene and propylene price increase by 30-50 EUR. Polymer producers will try to enforce a price increase exceeding that of monomer and they calculate with at least +10-20 €. It will be hard to make the market accept a price increase higher than this unless the increase of ethylene and propylene exceeds 50 €.

Polyolefin price increase expectations are supported on one hand by the fact that some converters started buying in advance. On the other hand by the fact that polymer producers, following the increasing demand, have increased their prices as early as in August by 10-40 EUR. This means that the market started to include the expectations for September into the prices in advance. A disturbance would occur only (and there are low chances for that) in case the ethylene and propylene contract prices would not increase in September.

In Poland the situation is slightly different, probably because all were on leave last week, the increased demand was not palpable. But according to the opinion of traders life will start as of August 21, they anticipate high demand and consumers buying in advance.

The regional PS market is or will be in trouble in September. Because of the expected shutdown of Versalis (Százhalombatta) which will last through September. PS production in Greece is expected to restart on August 21, but this will have just a minor effect on the Central-European region. Market players forecast a low supply and shortage for September both in case of GPPS, HIPS and in case of EPS in particular. Insulation material producers have announced their prices for September as early as now, calculating with a clear EPS price increase by 30-50 €.  In September price movements will depend on the PS supply and demand, it is almost independent of the SM price relations. Similarly to August, theoretically it is also possible that with decreasing monomer prices polymer prices will increase. But also the SM market is coming back to life, due to the Asian price increases also European spot prices increase.

Polyolefin grades

The price of LDPE increases continuously due to pre-purchases. Below 1,200 € LDPE produced in the EU is not available at all.  There are no significant quantities of import from outside of Europe any more on the market. Regional and European producers offer their products in a price range of 1,200-1,260 €.  The demand is expected to live up this week, within the next month price increase can be expected. But there are no significant quantities of goods on the market. By the end of August the prices will expectedly reach the September price level (1,220-1,280 €). But Poland is here also different, here there is for the time being no LDPE price increase and shortage, but as of Monday demand is expected to start and tendencies will follow general Central-European tendencies.

HDPE started August with roll over and remained. There was no price increase last week. The willingness to buy in advance is also low. Polish prices start from 1,020 EUR, while in other parts of Central-Europe from 1,050 €.

There is a slight improvement on the HDPE pipe market. Demand is better than last year but still below the expectations. There are low quantities purchased in advance, but this did not cause price increase on the market. It is still possible to buy, due to the roll-over, at prices from July. Market players wait for the real season start. Though from the construction season there are only 3 months left. It is possible that the season this year will start next year only. The typical price range is 1,230-1,290 €.

Probably also the demand for HDPE will increase, but this will not mean that the price would increase during the month. HDPE prices will probably follow monomer prices in September as well. 

The LLDPE C4 situation remains unchanged. It is almost impossible to buy high quantities at low prices (1,120-1,140 €) while smaller truck load quantities are easy to buy in a price range of 1,160-1,200 €.  The real headache for large buyers is September, when demand will be much higher but no change is expected in the supply. Most of the LLDPE produced in the Middle-East is absorbed by China and India.

mLLDPE demand is stable, supply is broad, the price range is stable and in a range of   1,190-1,230 € in August.

PPH demand is good and getting better, pre-purchases have started. Some European producers have already increased prices slightly during the month, by 10-20 EUR. For the time being there are no grades in short supply, in spite of the fact that also traders try to retain the quantities in the hope of higher prices in September. But traders distributing lower quantities complain about lacking demand, it is already hard to sell PPH at prices higher than 1,150 €.  Expectedly in September, in addition to the monomer price change there will be a price increase by some 10-20 EUR.

PPC demand is increasing.  Due to the willingness to buy in advance.  Also here there is a minor price increase brought forward (+20-30 €/t). Typically European products could be purchased last week in a price range of 1,160-1,220 € (full truck loads).  “Retail prices” are typically by 30-40 € higher than this.

PPR supply is stable, prices followed the monomer prices and remained unchanged.  The typical price range is 1,180-1,240 €.  In the second half of the month no price increase is expected.

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

Polystyrene grades

The short EPS supply that started last week continues.  It is almost impossible to get EPS feedstock. Mostly minor converters are affected by this. Large ones have more or less secured their supply for August. The real problem is the supply in September, as we have forecast before, supply problems in case of EPS polymer and finished products are to be expected. Central-European cannot be covered from West-European sources because of the main season. All this will affect mainly minor converters. All this enables converters to make up some of the losses they suffered during April-June. At the present the price of EPS finished products keep on increasing continuously and increase is to be expected for September as well. Increase is to be expected in EPS prices as well (30-70 €). The present price range is 1,350-1,420 € and in September average prices can exceed 1,400 €.

The prices of GPPS produced in Europe followed SM and dropped by 20-30 €.  Last week was silent regarding demand. But there are more and more buyers who are interested, we anticipate increasing pre-purchases and slightly increasing prices during the last 10 days in August. The typical price range of GPPS produced in the EU is: 1,250-1.370, in case of the import from outside of Europe and from Russian 1,200-1,250.

The short HIPS supply is counterbalanced by the low demand caused by the summer season.  Roll-over could not be achieved, products made in Europe are characterized by a price drop of -10-30 €.  Import supply is good, HIPS from Iran was available in the southern region within a price range of 1,240-1,280 €.  The price range typical for European products was 1,370-1,500 €.