Polymer prices - Weak Easter demand and expectations of price declines in May
However, the situation was different for PVC, with a minor panic in Central Europe over the repeated shutdown of Anwill. PVC converters have sought to hedge their bets, in many cases ordering much larger quantities than usual. Due to the upcoming semi-holiday week and low feedstock prices, most converters will wait, so with the exception of PVC, we expect generally weak demand in the week ahead.
The few days of quiet ahead give us a chance to calm down after the excitement of the past few weeks. After both the United States and the EU mutually postponed significant tariff increases, market nervousness decreased significantly, but tension remained among the players. The new term "shifting trade flow" has emerged. However, the realignment will not be quick or easy. Even if there is a realignment, it will take months. As the introduction of tariffs has been postponed, the motivation, the initial push and even the starting date for the restructuring is missing. The next 3 months will be characterized by a kind of uncertainty hovering over the market. As a result, in the short term, there is more likely to be a shortage of some import grades, as some traders have not bought in recent weeks, and some multinational (intercontinental) producers are significantly reducing the volumes they plan to import from their North American factories to Europe by 2025.
The uncertain trade situation is also holding back demand and investment. This is one of the direct consequences of the fact that no noticeable increase in overall demand is expected this year. Rather, consolidation processes and bankruptcy waves are intensifying, thereby reducing and reallocating demand.
One reason for the decline in converters' demand in April is the price decline expectations for May, which appear to be well-founded. Although feedstock prices have partially corrected from their lows of 10 days ago, they are still triggering a fall of around €100 for olefin monomers. The feedstock price correction is likely to continue in the last week of April, so we expect "only" a €50-90/t drop in olefin monomer prices in May. However, polymer producers are likely to try to increase their "spread" and not pass on the full monomer price reduction to converters. For polyethylene and PVC, this is likely to be successful. Polypropylene is a big issue, as the cheapest PPH prices are already close to €1,000 due to weak demand. A significant PPH price decline that tracks monomer price changes would bring a period of triple-digit PPHs. Low prices would encourage European PP producers to reduce production, which would mean a significant reduction in supply.
Demand in May is expected to be better than in April for all polymer grades, but the recovery is likely to last until mid-June only. In the case of construction, the season is finally expected to start in the building construction sector.
There is a lot of uncertainty in the styrene value chain, but market participants do not expect a price increase in May, despite the significant supply uncertainty. The main reasons for this are the significant fall in benzene prices in recent weeks and the low level of import SM prices. As for the May monomer prices, expectations are pointing towards a smaller decline. However, in the case of SM, there are also fewer goods on their way to Europe than usual. This could easily lead to surprise price changes in the first week of May.
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