Weekly commodity price report

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

• BRENT oil price 67.07 USD/barrel, slightly increasing prices,
• EUR/USD: 1.1369, EURO stagnating
• NAPHTHA: 502.0 USD/t, increasing prices
• Unbalanced demand,
• Slightly increasing SPOT olefin monomer and SM prices
• Ethylene (C2) spot price (FD NWE): +30 EUR/t compared to the status at the beginning of the month (815 EUR/t),
• Propylene (C3) spot price (FD NWE): +20 EUR/t compared to early the month (935 ER/t), Styrene monomer (SM) spot price (FOB Rotterdam): + 25 USD/t compared to early the month (1,010 USD/t),
• Generally good, broad supply,

With the end of the month at hand market players concentrate on the prices to be expected in March.  The question is again the tendency of monomer prices. In February those determining monomer prices missed the opportunity to increase prices by 20-30 Euro. But the 3% NAPHTHA price increase could have been the reason to increase olefin monomer prices.  Now it is impossible to pass on in one step the almost 17% NAPHTHA or 15% oil price increase that happened since early January. The SM price increase that happened in February was a clear signal for the market stating that the season was here and prices increased. This can be a good basis for the price increase in March as well.  European polyolefin producers could not give a clear signal to their buyers regarding the direction of prices in February. This was coupled also with the polyethylene oversupply that resulted in roll-over in the first half of the month. But in the second half of the month the symptoms of price erosion have already appeared. Not only in the field of LDPE but in the field of HDPE as well.  First of all in case of BM and IM grades. In addition traders try as early as now to contract polyethylene and PPC shipments arriving March, April from overseas.  At prices similar to those in February. In this way they generate the false illusion in converters that no price increase is to expected in March, maybe not even in April.  The weak USD favorable for importers is probably just a transitional phenomenon.  But this is absolutely enough to interfere with the judgment of converters.  All this confusion is boosted by the general pessimism in Europe regarding economic growth.  The German „Manufacturing PMI” is 47,6. This means that company managers rather expect industrial production to drop.  In the meantime the volume of orders placed with Central-European plastic converters is high.  Similar to previous years.  However pessimism sneaking in makes converters precautious.   The misconception, namely there would always be cheap polymer on the market from sources outside of Europe, still lives on. But before the creation of significant “hubs” supply will always be ad hoc,    and will highly depend on the USD exchange rate. But converters who can, could stockpile, buy inventories now in this cheap period in advance fare well in the medium-term.

Theoretically the price of ethylene and propylene could increase by more than 100 €.  But with the present, broad polymer supply converters can accept a monomer and polymer price increase by 30-50 €.  In case of SM only the increase is sure, its extent is still a question mark.

Polyolefin grades

Typical LDPE prices were in a range of  970-1,050 €/t last week.  The price range came to be more narrow. The bottom value of 950 Euro changed to 970.  Demand seems to be starting in the southern region.  The bottom of the price range started to increase. All this means that cheap positions slowly disappear from the market. Demand is good. However supply is too broad. In this way polymer producers who still keep their prices high (at about 1,050 €/t) experience lacking demand.  In March producers will probably try to follow monomer price increase, but import supply might mitigate the planned 30-50 Euro price increase.  Regional supply, in the southern region in particular, will be restricted by the one month’s shutdown of HIP Petrohemija due as of the middle of March.

In Central Europe  HDPE prices eroded slightly and were in a range of 1,050-1,160 €/t last week. The price reduction affected primarily the HDPE BM grades. HDPE BM grades were available in a price range of 1,055-1,160 €/t.  The price of HDPE IM grades is 1,050-1,120 €/t, while HDPE Film prices decreased a bit, they were in a range of 1,070-1,160 €/t. The big loser of the last week was MDPE,   as MDPE Film grades from Egypt, with a price below 1,100 € appeared on the market.  This is cheaper than  MOL, but even cheaper than the prices of HIP Petrohemija.  Supply is good, broad. The expected monomer and polymer price increase is limited by the supply of materials imported from outside of Europe only. A HDPE price increase following monomer prices is probable.

HDPE (100) prices did not change significantly, they are in a range of 1,240-1,320 €/t. The season has started, demand is high.  Producers already accept orders for March. Because of the expectedly good construction season in Europe we expect high demand as of March. In this way we expect a polymer price increase exceeding monomer prices by 20-30 Euro.

LLDPE C4 prices were in a range of 950 - 1,030 €/t last week. The top of the price range dropped by some 10 €.  The price depends on the “strength of the USD”.  The price level of 950 is probably the lowest value of the first quarter. From here the only way is up.  If also the other polyethylene grades will increase, this can pull along also LLDPE C4. 

  mLLDPE prices are in a range of 1,130-1,340 €/t. Demand is good, but the supply increases every week.  In March we expect a price increase corresponding to the monomer price increase in case of the lower values of the price range and a price increase smaller than this in case of the top of the price band.

PPH demand is good.  Some producers accept pre-orders as early as for March.  As import continuing to falter, prices remained stable in a range of  1,110-1,240 €/t. PPH Raffia prices are in a range of  1,100-1,160 €/t. The price range of  non-special PPM IM products with medium melt index was 1,110-1,180 €/t.  The prices of products with high melt index were in a range of 1,170-1,240 €/t last week.  The high CE demand is expected to continue through March.  In this way we anticipate a price increase exceeding monomer prices by 10-20 €.  The question is when Russian import is going to start again.

In case of PPC there are still many shipments from outside of Europe on the market. These shipments, for the time being, keep the bottom of the price range down.  Typical prices were in a range of 1,190-1,300 €/t in Central-Europe last week.  The demand is dynamic, in case of pipe grades in particular.  European producers prepare for a price increase that will probably slightly exceed monomer prices. Probably the bottom of the price range will also increase by 20-30 Euro.

The PPR price range was 1,240-1,340 €/t, depending on the grade, producer and application area. The demand for pipe grades is very good and will also probably remain good through March. Here in case of PPR, both in case of IM and pipe grades a polymer price increase exceeding monomer grades is probable.

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

Polystyrene grades

The CE EPS market is getting dynamic. Season has arrived.  Because of the permanently spring-like weather construction has started.  Prices were in a range of 1,200-1,280 €/t last week.   Insulation material producers anticipate a high season. Demand is high as early as now. Those who could, have bought significant feedstock quantities,   or have premanufactured products for the season.  Price increase is for sure both in case of polymer grades and SM. But the rate of the price increase is still uncertain.

The GPPS/HIPS market is getting also more dynamic.  The grace period characterized by cheap prices is soon over. Cheap quantities disappeared.  Typical GPPS prices remained in a price range of 1,170-1,220 €/t.  HIPS prices were in a range of  1,220-1,300 €/t.  Supply at this price is still short. We anticipate price increase in March.