Weekly commodity price report

Low polyolefin, high PS demand in November

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

• BRENT oil price 63.52 USD/barrel, it is increasing
• stagnating EUR, EUR/USD: 1.1665
• Naphtha: 578.34 USD/t, steeply increasing
• extremely low demand,

The first week of November was a big surprise on the polyolefin market. As a result of waiting strategy of plastic converters prices dropped steeply, in Poland in particular.  From Monday to Thursday prices came to be cheaper day by day. First of all producers and some traders with cheaper purchasing sources were behind the price drop. Polymer producers tried to comply with the price reduction expectations of buyers and reduced their November prices by 30-60 €. They managed to commit, sell 75-85% of their production, but for the time being they seem to have significant unsold quantities, partially quantities produced in October and November. Therefore integrated producers (with monomer production) try to sell further quantities on the market by customized and one-time offers.  These mean extremely low prices in most cases. Minor, regional, non-integrated polymer producers who work from purchased polymer, cannot do this. They are forced to keep their prices. Distributors and traders who still have inventories from October, or are bound to take over quantities in November, are in trouble. These inventories with a price higher than the market price cannot be sold now. The autumn season seems to be, like the last year, postponed to an earlier date, to August-October. November shows, similar to last year, a low demand. Converters, in line with the increasing price tendency, have bought in advance in August-September and now they have sufficient inventories. Therefore their demand is retained.

The market is full of tensions. Continuously increasing oil and naphtha prices will probably mean monomer price increase both in case of ethylene, propylene and styrene monomer. And this means price increase or the reduction of producer margin for polymer producers. But it is rather integrated producers who can reduce their margin, monomer buyers cannot. In this way the dissonance caused by increasing monomer and decreasing polymer prices can be compensated by the shutdowns of polymer producers. The supply was anyway decreased by the “force majeure” of Borealis in November, expectedly one of the minor crackers will be maintained also at the biggest Central-European producer in November. Reducing supply on the market. The traders and distributors who buy with a delivery deadline of 3-4-6 weeks from outside of Europe, now cannot follow steeply dropping prices. In this way inventories causing a high selling pressure slowly disappear from the market. And partially tension will disappear from the market. All this means that the month bringing the cheapest prices will no longer be December, but November. This is important for converters who traditionally try buying in advance at the end of every year for the first months of the next year. In this way it is possible that demand will be more dynamic and there will be higher one-off buys in the second half of November.

On the PS market the monomer price turnaround can already be felt. The increase of the Asian SM prices pulls along European prices as well. December seems to be again the month of price increase, both in case of SM and PS. For the time being seemingly there is no way to buy in advance, not only European supply is short, but also imported quantities disappeared from the market.

Polyolefin grades

The typical LDPE price range was 1,150-1,250 € (DDP) in the region last week.  Prices dropped steeply. We have measured the lowest price in Poland, which was, after the deduction of the bonuses and payment allowances below 1,140 €.  On the Polish market, in spite of the prices decreasing, demand is not high, the typical price range is 1,150-1,200 €/ton. Buyers have sufficient inventories, for the time being they buy only the most necessary feedstocks. In the other regions of Central-Europe the prices are in a range of 1,180-1,230 Euro.  Demand is not high here either (end of season).

HDPE market is still very low.  Polymer producers try boosting demand by extraordinary price campaigns. This means that HDPE IM and BM grades are available also at prices below 1,000 €/t (FCA).  In spite of this there is no sign of the market living up. We have measured the cheapest prices below 1,000 € in Serbia and in the Czech Republic.  Polish prices just came close to 1,000 €, but are expected to be lower than this as early as this week.  The typical Central-European price range was 980-1,100 €/t last week.

The HDPE pipe market tendency is favorable.  The demand is good, prices dropped only by 10 Euro compared to October, the typical  price range was 1,320-1,400 € last week.  We expect no price reduction in November.

There was a minor LLDPE C4 price reduction last week.  The typical price range was 1,130 -1,170 € in case of large buyers and 1,180-1,220 € in case of small ones in Poland. In the other countries of the region the typical price range is 1,170-1,240 €.  Supply is broad, demand is balanced.

The prices of  mLLDPE measured in the region are within a price range of  1,210-1,300 €.  There is no oversupply, in this way no further price reduction is probable. Supply is good, demand is in line with the season.

The PPH market opened with low demand.  Trading price ranges clearly moved below  1,100 €. In the southern region of Central-Europe, in Serbia, Macedonia, Bosnia the market is very weak. Local polymer producers hardly get orders.  Buyers try pushing prices down, but this is limited by the monomer price. Some integrated polymer producers reduced their FCA prices below 1,000 €.  In this way PPH Raffia grade was available in the Czech Republic at a price starting from 980 €. But PPH IM grades are still higher than 1,000 €. Inventory pressure is high on all producers, what is more, traders and distributors alike have significant inventories. Apart from special prices offers, the typical price range is 1,020-1,200 € in the region, depending on the grade and application area.

There is end-of-the-season demand also on the PPC market.  On the IM area demand started falling, an exception are only producers of construction packaging materials, where, due to the good weather, the season is not over yet. But contrary to polyethylene, there is a low demand also on the PPC pipe market. Prices have clearly started downwards. In Poland PPC prices were in a range of  1,150-1,190 €, with retained demand.  In the other regions the typical price range was 1,180-1,210 €. 

The typical trading price range  of PPR was 1,220-1,280 € last week.  We did not see a major price reduction in spite of the fact that the demand in this segment also shows signs of the end of the season.

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

Polystyrene grades

The PS market shows its usual confused face this year. Because of the increase of the SM and PS prices import from outside of Europe is less and also European producers have closed the “order books”. Now the market faces another price increase.

In case of EPS  there was an average price drop by 50 €.  Bigger buyers could also realize a price reduction by 70 €. But supply is still short on the market. This is slowly counterbalancing also the demand getting lower because of the winter. But the season is not yet over in case of insulation material producers, demand is high and is also expected to remain high in November. The typical price range was 1,500-1,620 € last week.

GPPS demand increased. European producers reduced prices by an average of 70 €.  Missing import and the delayed restart of Versalis-Dunastyr caused temporary feedstock shortage on the market. The typical price range was 1,230-1,330 Euro in case of GPPS produced in Europe.  Imported materials were also within this price range, with low quantities.

In case of HIPS average prices dropped by almost 100 € in November. The price range of HIPS produced in Europe is  1,310-1,400 €.  But the price of the cheapest products imported from outside of Europe remained below 1,300 €, though there are no significant quantities on the market.  What is more, because of the expected increase, traders will not launch their inventories on the market.