Weekly commodity price report

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

• BRENT oil price 82.72 USD/barrel, stagnating prices
• EUR/USD: 1.1604, Euro getting stronger
• NAPHTHA: 676.13 USD/t, increasing prices
• demand corresponding to September last week,
• short HDPE and PPH supply,
• Uncertainty about the contractual monomer prices in October, only the price of C3 monomer is known
• Propylene C3 +20 (1,070 €/t)
• the maintenance season in CE has started, the following plants are maintained:
• The HDPE plant and the smaller PP plant (220 kt/year HDPE capacity, 100 kt/year PP capacity – as of September 24, 2018 in Tiszaújváros) of MOL Petchem.
• BOP (320 kt/year HDPE capacity, 100 kt/year LDPE capacity,)
• Unipetrol (200 kt/year HDPE capacity, 280 kt/year PP capacity,)
• In Russia the HDPE plant of Kazanorgsintez (540 kt/year HDPE capacity) is down for maintenance and the PP plant of Totál in France, Lavera is down, (300 kt/year PP capacity). The 150 kt PP plant of  LyondellBasell in Wesseling is also at standstill.
• October will bring more outages: BOP – Plock (400 kt/year PP capacity) October 4-21, 2018, Slovnaft – Bratislava (255 kt/year PP capacity) as of October 15, 2018, LyondellBasell Ferrara as of November 5, 2018)

Plastic converters did not start yet buying because of the expected outages. Yet the PP supply that seemed to be still abundant early last week showed shortage at the end of the week in case of some PPH IM grades, in Poland in particular.  Less PPH arrived from Russia as well, in this way even cheapest prices started increasing in Poland. The apparent abundance seems to strike back. The many offers have created a false security, now it is visible that there are and there were no real quantities behind this. Producers wash their hands, they also wait for what is going to happen. In September they sold everything they wanted and confirmed shipments for October to their customers. The converters that followed the monthly purchasing rhythm they were used to in 2018 might fare badly, as in the second half of the month PP supply will drop further. Spot PP will not be strong in the second half of October. The inflow of WE materials being usual in August and September via traders will not be typical in October because of the outages. In this way it is clear that PP supply will be short, that of PPH in particular.

HDPE situation did not improve either, with the exception of HIP-Petrohemija almost all CE polymer producers are down or will be down. October will be critical in terms of HDPE.

LDPE is not yet known, some WE producers do not think further price drop would be impossible. This is implied by the fact that larger WE producers that so far were not strong on the CE market, offered significant quantities in the second half of September to large consumers at a price lower than the market price.  It is interesting that in case of smaller consumers the price erosion did not continue, prices early September and at the end of September were similar. It is the common interest of all market players to stop the further reduction of LDPE prices. Yet the uncertain demand prompted LDPE producers to immediate sale and this is how the downward price spiral developed.

A good sign for uncertainty is that on the last day of the month only the propylene price is known from the October contractual monomer prices.  Also producers are pretty uncertain about the price tendencies of the months to come. Short PP supply seems to be for sure, while PE is uncertain, in this way they were not able to agree on ethylene monomer price either. In addition also oil price started climbing and so did NAPHTHA slightly as well. There is probably the intention of monomer producers in the background to increase prices and not even polymer producers can accept that. At any rate our ethylene forecast is a 0-20 Euro roll-over price increase.

Polyolefin grades

In CE the typical LDPE price range is 1,080-1,140 €. The demand became slightly dynamic in the central region.  Central-European polymer producers will probably come up with roll-over in October, which will appear as price reduction in case of some overpriced products.  Yet the basic 1,080-1,140 € price range will not change in the first half of the month.

HDPE demand, for bimodal BM and film grades in particular was very good last week, but for MDPE film grade as well.  We have found a low demand in Serbia only. The typical CE price range is 1,190-1,260 €/t.  An average price increase by 20 EUR can be expected in October.

HDPE (100) demand is low, now polymer producers try allocating as much of their goods to distributors as well as possible.  Practically the season ends in the last days of October. We can anticipate major purchases, the market to get more dynamic only as late as in December and January only, in the frame of the large-scale end-of-the year special prices. The typical price range was 1,400-1,520 € last week.  In October roll-over is expected.

The typical prices of LLDPE C4 were in a range of 1080 and 1150 €/t last week.   There was hardly any change. Demand is good and in line with the season.  Because of the strengthening of the Euro compared to the USD unchanged prices are expected.

 mLLDPE prices did not change last week, they were in a range of 1,260-1,400 €/t.  Demand came to be weaker. The biggest market, the season of agri-stretch has ended. In October we anticipate lower demand, increasing supply, unchanged prices.

PPH prices have slightly dropped in the southern region, while in Poland even the cheapest prices are higher than 1,200 €.   Demand is good, increasing. There is not much Russian import on the market, its price is higher than 1,200 €.   PPH Raffia prices were in a range of 1,210-1,240 €.  The price of non-special PPM IM products with medium melt index is: in a range of 1,200-1,240, while that of products with high melt index starts from 1,250 €. In October short supply and a price increase by 20 Euro is expected.

Typical PPC prices were in a range of 1,290-1,440 €/t in Central-Europe last week.   We do not know yet, how the outages will impact the market. But it is visible that the supply will be reduced significantly. CE producers will probably try keeping their September prices. Increasing prices is a risky step, as mainly in case of commodity finished product producers prices are too high anyway.   This by itself restricts the demand.  In spite of the monomer price increase roll-over is probable.

The typical PPR price range was 1,340-1,460 €/t, depending on the grade, producer and application area last week.  Yet the price of some special grades is as high as 1,500 €/ton. Demand is getting shorter and will drop further in October. Good demand and slightly increasing prices are anticipated. This means that the bottom of the price range will drop by some 20 Euro.

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

Polystyrene grades

Market players expect a price drop by 50-60 €/ton.  This determines polymer prices as well.  In this way, with the end of the season at hand, this means also clearly dropping prices.

EPS demand was good last week.  In case of some producers the prices have dropped slightly, forecasting the price drop in October at hand.   The price range is broad, the typical prices were in a range of 1,550-1,680 €/t last week.   We anticipate an average price drop by 50 Euro. Typical prices will be in a range of 1,500-1,650 €/t in October.

The demand for GPPS and HIPS is low. There is again GPPS and HIPS originating from Iran and Egypt on the market.   The price of this GPPS is in a range of 1,380-1,420 €/t, while that of this HIPS is 1,400-1,450 €/t. In case of European products high price is typical.   The price of GPPS produced in Europe is in a range of 1510- 1650 €, depending on the grade and application area.  HIPS prices are in a range of 1,550-1,720 €. In their case a price drop by 50-60 Euro is to be expected, European prices and import prices are getting closer to each other.