Polymer prices - Chaotic prices in the first week of April
Polymer manufacturers attempted roll-over in their initial tentative prices, but in the case of monomer price reductions exceeding 50 euros, this was difficult to defend, so they were forced to reduce prices. There is a lot of pressure on polymer producers to cut prices, but most of them are trying to keep a small excess spread in April. Perhaps this is the reason why the price lists were released relatively late on Thursday, Friday; but there are also some polymer producers who have postponed the release of their April prices until Monday. However, traders were much more active, starting to test the market and prices in the middle of last week. Most plastic converters have stock, enough even until the end of April, and there are even converters who, due to weak demand, have no problem not buying anything until mid-May. Converters will need to place their orders next week if they want them to arrive before the Easter holidays. The market is currently chaotic and difficult to understand, with a lot of information circulating, but it is likely that this will mean strong demand in the second half of the week ahead, when the picture will become somewhat clearer.
Overall demand is mixed, and for polyethylene packaging materials, for example, is not segment specific but in many cases size specific. Larger companies now seem to have the edge, with the ability to manage new environmental administration and use a high proportion of recycled materials. This is not true for BOPP and stretch film manufacturers, who are reporting generally weak demand. In the construction industry segment, pipe and cable production continues to perform well, while demand for insulation materials has not yet picked up.
Supply constraints may exist for products where US imports play a significant role. These are mostly polyethylene grades. Supply could be critical in countries that have relied more heavily on overseas imports. Here we have already seen over the past week that HDPE price offers have been accepted without negotiation by converters and traders. There will certainly be availability problems and, at the same time, temporary price increases for some polyethylene grades, but we do not expect a buying spree or panic. This is partly due to a lack of converter stocks and partly to end-user demand, but the fact that feedstock prices began to fall dramatically on Friday last week also plays an important role. The steep drop in oil prices will likely be followed by a correction and BRENT prices will return to around USD 70. However, this price drop makes it possible for those who do not necessarily need to buy to wait. Wait to see where the April prices will bottom out. We will probably only know this in the third week of April, the week immediately before Easter, when it becomes urgent for polymer manufacturers to sell.
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