Weekly commodity price report

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

• BRENT oil price 62.07 USD/barrel, it is increasing
• EUR getting weaker, EUR/USD: 1.1609
• Naphtha: 558.16 USD/t, increasing price
• short week full of expectations,
• for the time being just a few polymer producers published their prices for November,
• C2- ethylene, C-3 – propylene roll-over,
• SM -90 €/ton, reduction

Roll-over, correction and and price reduction - all three characterized last week in our region. Roll-over and downwards pointing price correction characterized the polyolefin market, while the price of polystyrene grades started dropping.

The last short week was about a major dilemma in Central-Europe on the market of polyolefin grades. Plastic converters expect a clear and significant price drop which is, due to the external circumstances, increasing naphtha and crude oil price not possible for producers. Monomer roll-over is sufficient only for corrections in the prices and to adapt prices in November to the price level of late October. This has affect first of all the polymer producers who could not be flexible enough in October and could not follow the price drop in October due to the low demand. In their case the first price communications show a clear drop. Producers with lower capacities and more flexible pricing policy have reduced their prices also in South-East Europe. This region is the most susceptible to import from the near-east and to changes in demand. Here the price tendencies of November are already visible, pointing to reduction.

The majority of price communications by the producers are expected on Monday. Based on the preliminary orientation rounds, compared to the prices at the end of October roll-over can be expected with a price drop by 10-30 Euro, with corrections. More than that is not possible for the time being, as if the price of naphtha remains permanently high, this will absolutely mean monomer price increase in December, even a major increase (+20-50 €). But it is hard to turn around a decreasing price tendency towards sudden increase. Because of this they cannot allow prices to drop too low.

But PE and PP buyers keep waiting in October and will be waiting in November as well, forcing the price drop and the price ranges where it is already worth for them to buy. The problem is that the autumn “high” season ends at the end of October now in the third year. Construction, with the exception of pipe manufacturing, is the sector still booming, and automobile industry and the E+E industries stabilize the market.  Smaller and medium-sized packaging material producing companies report already about a lower volume of orders.  And December is here, which is only half a month. Many converters prepare for major buying at cheaper December prices. But this could come forward to November. Of course only in case a potential monomer and polymer price increase becomes clear in December because of the high oil and naphtha prices. This can save the demand in November and could drive the demand in December into the abyss.

SM dropped by 90 Euro, this is, along with the drop in October already 200 €/ton. Now plastic converters expect a major price reduction of the European producers. This means that the European GPPS and HIPS prices will come close to the prices of goods imported from South-Korea and other regions outside of Europe.

Now the reduction of EPS prices cannot be avoided either, as at the end of November the season for insulation materials comes to an end and the foundation for EPS sales in December-February can be laid now.

Polyolefin grades

The typical LDPE price range was 1,200-1,270 € (DDP) in the region last week.  There was a relatively low number of transactions, similar to the end of October. Based on some price announcements, in the southern and central part of Europe the price range is 1,210-1,270 €/t, while in Poland and in the northern region the LDPE price range is 1,200-1,240 €. Converters still expect dropping prices, therefore there was just a low volume of purchases last week and due to the price negotiations there will be a low number of transactions this week as well. The question is whether polymer producers following the weekly pricing policy will be able to remain tolerant or whether they will reduce their prices further, thus giving rise to the demand.

HDPE demand is low. The typical price range in Poland is by about 30 Euro lower than last week: 1,050-1,130 €/ton, depending on the grade. Cheapest and highest prices alike originate from European producer, in other parts of Central-Europe prices vary within a range of 1,050-1,150 €.  But for the time being the prices of many major producers are not known.  In this way we get a final picture about the November prices next week only. On the demand side waiting will be the typical strategy.

The typical range of HDPE pipe prices was 1,340-1,420 € last week.  For the time being we have received no price announcements last week. Demand is low, but in addition to minor corrections we anticipate no price reduction.

LLDPE C4 roll-over is expected.  The typical price range was 1,150 -1,190 € in case of large buyers and 1,200-1,260 € in case of small ones in Poland. In the other countries of the region the typical price range is 1,240-1,300 €.  Supply is broad, demand is balanced.

The prices of  mLLDPE are within a price range of  1,240-1,350 €.  For the time being roll-over can be expected, but the direction of prices is not clear in November. Because of the dollar getting stronger even minor price increases are possible.

PPH prices eroded further last week.  Minor polymer producers were forced to reduce prices, thus giving rise to the demand. Price increased  by about 30 €.  But buyers did not move. In the southern region polymer producers reported about lacking demand. Further price drop can be expected, cheapest prices will be below 1,050 € in the first half of November (FCA prices) coming closer to 1,000 €. Also the producers of the central region were forced to reduce their prices, correcting the movements of the market, but this seemed to be too much at times (-40-60 €) but this did not change the trading price ranges. 

PPC prices clearly started dropping last week.  Polymer price range moved by 20 Euro down compared to last week. The typical price range is 1,170-1,260 € depending on the grade and application area. But major users are still considering the offers received, but they will expectedly not buy at prices higher than 1,200 € early November,   what is more, they will rather buy close to the bottom line of the price range (1,170-1,190 €).  Also medium-sized companies can buy in a price range of  1,210-1,240 € now.  Supply is broad in spite of the fact that the plant of Borealis in Schwechat has not been  restarted yet. For the time being no shortage is palpable on the Central-European market. In the second half of November minor pre-purchases can be expected, if medium-sized buyers can buy below 1,200 €. This is already part of the preparations for the year 2018.

The typical trading price range  of PPR was 1,220-1,280 €.  The price range moved slightly, by about 20 Euro last week. Some producers carried out major price corrections (by about 50 Euro), but this did not affect trading price ranges.

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

Polystyrene grades

The SM price drop by 90 € laid the foundation for the price reduction expectations of PS buyers in October.  But for the time being we have received just minor specific news.

EPS buyers expect polymer producers to convey a more significant part of the SM price drop.  In particular as during the last 2 months SM prices dropped by  200 €.  Monomer price drop in October appeared as margin increase at polymer producers. Now the first offers are about a price decrease by 30-50 € (margin EPS (white), but buyers want more, even to get the total SM price reduction.  There are low chances for this, because the construction season is highly pulling demand along. But polymer producers have to think of the winter season (dropping demand) as well. Not the time is here to lay the foundation for buyer loyalty.  In this way it is possible that at last EPS prices will drop by  50-70 €.  In this way the price range will be 1,500-1,600 € in November.

GPPS demand was low last week as well.  The biggest European producer declared to reduce prices by 70 €.  This price reduction allows already to come close to import prices. But to boost demand it will be necessary to convey almost the total SM price reduction. The typical price range is expected to be 1,230-1,330 Euro in case of GPPS produced in Europe.

In case of HIPS a price drop by about 70-90 € can be expected in November.  In this way the price of HIPS produced in Europe can be expected to be in a range of  1,310-1,400 €.  But the price of the cheapest products imported from outside of Europe will remain below  1,300 €.  In case of import, because of the strong dollar, sellers have a smaller latitude, here no price reduction can be expected. The full price range will be  1,260-1,400 € in November.