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Smaller price increases expected in March amid uncertain demand
The seller side is also more of a wait-and-see approach, as they are preparing for a price increase in March. However, falling oil and feedstock prices have meant that the price of olefin monomers has not risen as much as previously expected. The slight increase in olefin monomer prices reflects uncertain market expectations. Polymer producers are likely to try to increase their spreads and raise their prices by €30-50, despite the near roll-over of olefin monomer prices. Increasing the spread, i.e. increasing the price above the monomer price change, can only be successful for those grades where supply has been tight recently and is expected to remain so in March.
During the first half of the week ahead, most sellers will test the market and will set the right prices in the second half of the week. It is almost certain that there will be no further price increases compared to the end of February, however, the prices of most polymers will increase compared to the beginning of February. There may be a greater price increase for polymers that are in very limited supply, such as MDPE Film grades. For some HDPE IM and PPH grades. In the case of PPH, prices from Central European manufacturers whose prices were still below 1,100 euros at the beginning of February will increase significantly.
Due to the relatively high prices of some polymers, Middle Eastern import shipments to Europe have begun, and in the case of LLDPEC4, the first cargoes have even arrived. This will have a price-depressing effect during March. For now, North American shipments are only arriving in small quantities, but that's not a problem for now. Due to increasingly tense political relations between Europe and the US, the risk of tariffs on shipments is high, and in addition, North American grades are currently considered expensive on the market.
Higher polyethylene prices are expected in the South Central Europe (SCE) region due to supply uncertainty. Although the introduction of sanctions against the Serbian oil company has been postponed by 30 days, for now, the majority of banks are still unwilling to forward or receive transfers from NIS or its subsidiaries. For this reason, we do not expect a smooth return to sales even after the restart.
The fundamental problem is that end-user demand is not strengthening. Although January started out promisingly, it was later confirmed that this was just a stock replenishment. Most people are hoping that March will bring the start of a season of sorts. The construction sector has the best chance of this, as warming temperatures outside are likely to spur construction work.
Contract styrene monomer prices for March have not yet been determined. Styrene market players do not expect a significant price change, a smaller price increase of 10-50 euros is likely. This is confirmed by the rollover in the United States.
The feedstock and monomer price changes will not induce significant price changes in March, but the final March prices will be determined by the balance of supply and demand.
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