Weekly commodity price report

Before another price increase

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

• Strong demand in Europe,
• BRENT oil price 53.78 USD/barrel, it is increasing
• EUR getting stronger, EUR/USD: 1.2038
• Massive suction effect of the USA on the monomer and polymer market alike,
• Regional producers have clearly increased their prices,
• CIS import lost due to the high demand in Russia and due to plant shutdowns.

In detail

Polyolefin price increase was accepted on the market. The prices of CE producers increased by 40-70 € compared to early August.  Though converters try to withstand the price increase, there is no time to wait, as with the exception of the HDPE BM and IM grades supply seems to be short. Most producers get prepared for a pricing continuously following the demand. Demand is getting stronger. There are two reasons for that: the first is that even the normal seasonal demand seems to get stronger. The second reason is that some plastic converters, being afraid of polymer shortage and of further price increases, try to buy in advance for October. Regional supply is not too strong either, and minor polyolefin producers cannot supply LDPE and certain PPH grades any more. But PPC and PPR supply is also short. A part of the traders, distributors keep waiting and have not launched yet on the market their inventories purchased in the summer. Converters use their best efforts to fight against the price increase, last week by the weapon of disinformation. There were many false rumors spreading about price reductions or about cheaper prices of smaller polymer producers. But the news did not prove to be true, every producer has clearly followed the monomer price increase and they even tried to increase prices beyond that. In particular smaller producers were interested in that, who work from purchased monomer. On the supply side we can anticipate it will get shorter in September, partially because of the suction effect of the high overseas demand (USA), partially because the import from the CIS states has dropped significantly, due to the planned maintenance at Stavrolen and due to the unexpected shutdown of the plant of SIBUR in Tobolsk. The restarted Ukrainian HDPE producer concentrates now on the Russian market because of the higher price attainable. The producers asked prepare for further price increases in the second half of September. All this can result in the repetition of 2015, when price increase expectations and the high demand resulting from that chased the market into a price increase spiral. At any rate most of plastic converters will be confronted this week with the fact of not getting the quantity of goods they expected or wanted to buy.

Now the PS market shows its worst face, the significant price increase by 190 € is coupled also with polymer shortage, due to the maintenance and the high seasonal demand.  In addition also the supply of goods imported from outside of Europe is also weak. Because of Christmas PS demand in the far-east is also extremely high. Because of the Harvey hurricane the USA came to be a net SM importer on temporary basis. All this projects the further monomer price increase and thus the polymer price increase as well. A second volatile wave seems to unfold this year, which, coupled with PS polymer shortage, has a very heavy impact on minor producers. Due to all of this the markets accepted the PS price increase, further price increase can be expected.

Polyolefin grades

The price of LDPE increased in a stable way last week, coupled with a high demand The prices of CE polymer producers start at 1,240 €. Last week rumors started about cheaper lots, about price cuts during the week, but they did not prove to be true. We saw some cheaper lots on the market from traders, but traders also try to follow the market. The Polish prices are still a question mark, as BOP will come up with its prices only by the middle of the week, by Friday the price level was not stable yet, but we are of opinion that the tendency of the prices will follow the CE region, we anticipate a clear increase. The typical LDPE price range is 1,230-1,280 € and is increasing continuously. 

Demand for HDPE FILM grades is getting stronger, due to the increasing demand.  Here polymer producers managed to increase prices by 30-45 €.  The typical price range is 1,110-1,160 €. Because of the stable demand a minor price increase by 10-20 € is possible in the second half of the month.

HDPE BM and IM prices could increase less, due to the lower demand.  The market copes with a max. price increase by 30 €.  The inventory level of CE polymer producers is good, supply is abundant, the typical price range is 1,080-1,140 €. We do not anticipate further price increase in September any more.

HDPE pipe prices increased by an average 40 €, demand is good, stable.  We do not expect price increase during the month, the typical price range is 1,270-1,350 €.

LLDPE C4 supply is good now.  An average price increase by 45-60 € happened.  Due to the decrease of import from outside of Europe, by the second half of the month, we expect shorter supply and increasing prices. This affects first of all major stretch film producers adversely, jeopardizing their safe supply. The typical price range is: 1,160-1,190 in case of major users, 1,200-1,250 in case of minor users.

mLLDPE supply is stable There was an average price increase by 40-60 €.  As the CE market can be supplied from European source, the “hurricane” effect is not really felt here. The typical price range is 1,250-1,350 €/ton. We do not expect price increase during the month.

PPH opened with an average price increase by 40 € this week.  Demand is dynamic. Also minor CE producers followed the increasing price tendency, and in their case, because of the weekly pricing, even further price increases increasing the demand are probable. At the present the cheapest PPH Rafia grades were available at prices starting from 1,050 €, but the typical, average regional price range is 1,080-1,130. Further increase is probable. In case of PPH IM we measured the cheapest prices in Serbia at about 1,060 €/ton, but in terms of the regional average the price range is 1,100-1,180 €, depending on the melt index and grade.

PPC supply is clearly short. Though prices increased on the average by 40-60 € “only”, but the bottom of the price range of August disappeared, it is no longer possible to buy below 1,200 €. The typical price range is rather 1,230-1,280 € and further increase can be expected.  The demand is driven, in addition to the season, also by advance purchases.  The Polish price level is not yet stable, thus here the price range measured is still broad, a price range of 1,200-1,270 characterized the markets las week.

PPR supply is short all over the region.  Major users can get the necessary quantities in part only. Due to this prices increased by far exceeding monomer, by 60-80 € and in some cases the price increase was even as high as 100 €. Now the typical price range is 1,250-1,360 €. Short supply and increasing prices can be expected.

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

Polystyrene grades

Dramatic SM and PS price increase is coupled with short supply. In this way price increases are accepted on the market without discussion. Smaller quantities outside of Europe can be found, mainly in the Balkan states, but they are sold out quickly. In September no major PS import can be expected. In this way the price increase can continue.

EPS prices increase by 230-260 € depending on the buyer, grade, without price negotiation.  Supply is extremely short, even large users can purchase the necessary feedstock just partially. For the smaller ones even partially covering their EPS needs is almost hopeless. Traders have no inventories. With regard to EPS finished products and feedstock continuous price increase driven by the continuous demand is to be expected. For the converters the most important thing is the purchase of feedstock, even “at any price”. Typical price range: 1,550-1,600 €.

GPPS supply is still short, while seasonal demand is getting stronger.  PS producers increased prices by an average 170-200 €.  Further price increase is to be expected. The supply situation is expected to get back to normal in October, after the EPS season and the maintenance activities in the region will be over.

HIPS supply is short, therefore the average price increase by 200-220 € was accepted on the market. There were still minor import quantities left over from the last month on the market, but these were first of all simple HIPS IM grades. The typical price range was 1,600-1,700 €.