Weekly commodity price report

Polyolefin prices closing in, volatile polystyrene grade prices in February

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

• BRENT oil price 69.08 USD/barrel,
• EUR/USD: 1.2515, getting stronger
• NAPHTHA: 592.32 USD/t, increasing price tendency
• Monomer prices in February,
• Ethylene (C2): +20 €/t, increased
• Propylene (C3): +28 €/t, increased
• Styrene (SM): +130, increased
• End of January demand,
• Total FM in the PP supply, shorter WE supply

Olefin monomer prices in February did not cause any surprise, they increased by 20-30 € in line with our forecast. Some polyolefin producers already came up with February prices, others are still testing the market. Polymer producers, mainly those in WE, would at any rate like to increase their margin. They wish to implement a monomer ’+’ price increase. They leaked as early as last week that they would increase prices by +50-70 Euro. In this way they condemned their distributors to despair. Plastic converters are not scared. The warehouse of most of them is still full with goods from January. Last week Central-European polymer producers prompted buyers to buy by price campaigns and price allowances.  Many bought during the last week of January, because of the expected price increase in February.  In this way during the next two weeks there will be no major constraint to buy, therefore there will be time to wait. On the other side it is important to note that real demand has not reached plastic converters yet. This fact has probably contributed to the fact that CE polymer producers who published prices so far have carefully increased their prices. In case of polyolefin grades by 10-50 €, depending on the polymer grade, on the product type and on the country.  Fortunately price differences between the individual producers are mitigated for the time being.  The market has rather closed in on prices. Price ranges came to be slightly narrower, the “low price” increased. Seemingly CE prices are detached from those in WE. But for the time being there is no reason to fear that WE producers would redirect quantities from Central-Europe to the West showing good demand, or to North-America paying higher PP prices. The CE market is important and they wish to keep buyers. In this way lower prices do not necessarily mean drop in the demand. This means that in the first half of February we will have to anticipate hard price bargains and slight price increases. The demand for plastic finished products taking off in February can create a real basis for the price increase. We are of opinion that February will be still silent, with slight price increase following monomer prices. But the price for this must be paid in March, when also CE prices will start catching up on WE prices. Then we will probably be confronted with major price increases.

Polyolefin grades

LDPE demand was low also last week.  Price ranges have become slightly wider, due to the price reduction by some producers. The typical price range was 1,130-1,190 €. But most deals were made in a range of 1,170-1,190 Euro. Polymer producers came up with a price increase following monomer prices. For the time being it is not easy to see if the price increase will be a success.  The bottom of the price range will most probably drop to 1,150 € and the top will increase to 1,250. But the price range where deals will typically be made will be 1,180 – 1,210 €/t. The cheapest region will remain to be the southern region in Central-Europe, due to the cut-throat price competition and to the polymer products imported from the Middle-East.

The HDPE market came to be a little bit more dynamic last week.  Demand increased slightly for FILM and BM grades in particular.  The market for injection molding products remains depressed. Polymer producers came up with price increase at various rates last week. But there was no major movement in prices, the ex-works prices of polymer producers are still typically below 1,100 € in case of FILM, blowing and injection grades.  The complete price range is 1,050 -1,180 € depending on the grade and application area.  This month we expect no further price increase.

The HDPE pipe (100) prices in February are not yet known, the price range was 1,360-1,440 € in January. Polymer producers intend to increase the spread. In this way we can expect a price increase by 30-40. The question is how successful this price increase will be in the region while demand is moderate. In particular as in January major quantities were purchased in advance, at special prices.

For the time being LLDPE C4 prices have not changed yet, we measured prices in a range of 1,120-1,180 €. We have measured the cheapest price (1,120 €) in the southern region.  Price increase would be logical, yet there are sufficient cheap import quantities on the market now.

Typical mLLDPE prices have not changed yet, they were in a range of 1,270-1,300 € last week in the region.  Polymer producers came up with a price increase by 30-40 €, which, in the light of the good WE demand, will be accepted in our region as well.

For the time being, on the PPH market the demand is lower than what we are used to in January, in case of raffia grades in particular.  The demand for injection molding grades seems to be much better, the season seems to start soon. But sales were hard last week because of the news of the cheap goods from Romania. Because of the cheapest PPH prices (about 1,050 Euro) also other producers were confronted with a permanent downward pressure.  Most converters have high inventories for 2-3 weeks. In this way it is questionable how receptive they will be for new, higher prices. But now it is the right time to buy as in March a major price increase is possible because of the European demand getting more dynamic and due to the high PP prices on the world market.  Propylene price increase is expected to increase these prices as well by 30 €. In this way also the cheapest prices in the southern and central region are close to 1,100 €. But we expect the typical PPH IM price range to be 1,130-1,180 €, and in case of raffia grades the typical range will be about 1,110-1,170 €.  

PPC prices vary in a range of 1,170-1,200 Euro in Poland. In the other parts of Central-Europe the prices are higher, the typical price range was 1,190-1,240 € in the last week of January. Polymer producers in WE came up with a price increase by 60 Euro, referring to the good demand. Yet the rate of producer price increases known so far from Central-Europe was only 30 Euro.  As the PPC supply is short, a price increase by about 20-30 Euro seems to be probable.

On the PPR market the typical price range is 1,270-1,360 €. Demand is good. Polymer converters propose a price increase by 30-60 €.  The increase by 30 Euro will certainly be accepted and in the second half of the month further price increase is possible if PPR supply gets shorter.

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

Polystyrene grades

It is a big question mark on the EPS market what kind of consequences the increase of monomer prices by 130 Euro will have.  The start of the construction season is still 2 months ahead. Most insulation material producers have sufficient stocks. In January rather price reduction and no price increase was typical. All this means that converters have time enough to wait for the SM price to drop which is highly possible if we consider the price volatility in 2017. In February we anticipate a price increase by 60-80 Euro and moderate demand.

The GPPS, HIPS market is also on the go, demand and supply are good.  We were not confronted with supply problems last week. Still GPPS from Iran is the cheapest, it is offered in a range of 1,260-1,280 €.  Polystyrene market was shocked by the 130 € SM price increase, WE polymer producers came up with a price increase following monomer price changes.  But the result can be doubtful as import PS (GPPS, HIPS) from outside of Europe (Iran) is still available at January prices. The price increase is just enhancing price differences, which might grow from the present 200-250 € even to 400 Euro. Iranian prices depend on the Asian SM prices, which dropped last week because of the New Moon Year being at hand.