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Summer vacation at the market II.

The prices of “commodity” polymers were affected by the following factors last week:

• BRENT oil price 43.31 USD/barrel, stagnant oil prices.
• EUR/USD: 1.1634, slowly but steadily weakening dollar
• NAPHTHA (European) 383.22 USD/t, slowly rising prices,
• 20-50 €/t monomer price increase expected (C2, C3, SM)
• Ongoing downtime/maintenance
  • Unipetrol: HDPE 3 (270 kt/year), PP 280 kt/year
  • Lukoil Neftochim Burgas: PP (80 kt/year)
  • Expected maintenance:
    • From August 1, MOL Petrochemical (Tiszaújváros):  Steam cracker II. (250 kt/y), HDPE 2 (220 kt/y), less propylene is likely to be available due to the cracker shutdown, which is why smaller shutdowns are expected in both PP plants.
    • Smaller advance purchases,
    • PE demand corresponds to the usual end of July,
    • The PE supply is generally good.
    • The inventory of converters is high,
    • The market expects a smaller price increase,
    • Weak demand is expected in the first half of August.

While most of the companies produced last week, the holiday season has already made its impact felt. And we will feel it for the next 3 weeks until mid-August. The slight recovery in the market over the past week is also due to this. Many people bought in advance so that they would not have to deal with business or procurement issues during their vacation. Another motivation for pre-purchase is the expected smaller price increase.

A small increase in monomer prices between € 20 and € 50 is very likely. This will also affect polymer prices. However there is little change for price increase following monomer prices. As demand in August is expected to be lower than usual, especially in the first half of August, and weak demand does not support price increases.

In the last 10 weeks, the price of PE has risen by € 150-160, already reaching the pre-epidemic price level in March. The price of PP has risen by € 100-120 in the last 10 weeks, but has not yet reached pre-epidemic levels. Similar to the PS, which produced a price increase of € 120-140. Producers of finished and semi-finished plastic products find it difficult to pass on this steep increase in their prices. Therefore, a “rest month” would be needed, when the price increase of plastic products can also prevail. The margin position of polymer producers is now good, the LDPE FILM -ethylene monomer price difference increased by almost € 150 compared to the beginning of March (from 5 EUR/t to 153 EUR/t), the PPH IM-propylene monomer price difference increased by € 90 (from 143EUR/t to  233 EUR/t). The GPPS - SM price difference increased by more than € 120 (from 158 EUR/t to 283 EUR/t). (Polymer price listings refer to the MyCeppi CE Average in all cases).

All this means that polymer producers are able to transfer smaller amounts of € 20-30 from their margins to plastics converters. The question is whether they want to. The relationship between supply and demand will then determine at the local level the extent to which polymer prices follow the change in monomer prices. The most likely is a small price increase of 20-30 €/ t for both PE, PP and PS.

Polyolefin grades

In the fourth week of July, LDPE prices ranged from  880 to 960 EUR/t. In Poland, demand picked up slightly due to advance purchases. In the Southern Region (SCE), demand fell short of expectations in July. Most deals were made between 910-940 €/t. Supply is good. All materials are available. Converters are preparing for a smaller price increase of € 20-30. However, polymer producers will try to follow the rise in polymer prices.

In the fourth week of July HDPE prices were in a range of 840 -  950 €/t in Central Europe. Typical prices are in a range of 860-920 €/t, there was a minor price increase mainly in Poland, due to the pre-purchases. Cheap Russian and Central Asian materials ran out, and traders were also on vacation last week. The supply of bimodal grades is limited. Central European prices by HDPE grades over the past week were as follows:

• HDPE BM:          850-940 €/t,
• HDPE IM:           850-940 €/t,
• HDPE FILM:       840-920€/t,

The supply of bimodal grades is expected to be tight in August, so their price will increase by the same amount as that of ethylene monomer. The supply of unimodal grades is wide, but the demand falls short of expectations, in the first half of August a price increase of 0-30 €/t is expected.

In the last week of July, HDPE (100) prices ranged from 1,030 to 1,050 EUR/t. There was no change compared to last week. Demand is seasonal, summerlike, but not bad. Converters have probably purchased in advance  last week. Some polymer producers will definitely follow the price of ethylene monomer. However, there are doubts about the authenticity of the demand. Some assume that good-looking demand is nothing more than advance purchases for the fall period. If this assumption is true, then a price increase following monomer prices is unlikely.

In the third week of July, LLDPE C4 prices were in a range of 890-970 EUR/t, the prices of the last week did not change. Demand is good. A smaller price increase of around € 20-30 is expected in August due to the weakening dollar.

In the third week of July, mLLDPE (C6) prices were in the price range of 900-1,120 EUR/t. Most transactions took place in a range of 950-1,100 €/t. Supply inched towards higher priced products. There are offers for South Korean materials with a 6 week delivery time at the bottom of the price range. But the oversupply that has characterized the past year seems to be disappearing. A price increase following the change in the price of ethylene monomer is likely.

In the third week of July, typical PPH Raffia prices ranged from 880 to 980 €/t, depending on the producer and grade. The demand is in line with the season.  Supply is broad. Converters have sufficient feedstock so the expected price increase efforts can run aground due to the low demand for the grades used for extrusion and thermoforming.

The prices of PPH IM non-special grades with low and medium melt flow index were in a range of 840-940 €/t last week in Central-Europe. Products with a high melt flow index were offered by polymer producers and traders at prices between 880-970 €/t. Demand is weak, all sellers complain about it. Sale is possible close to the bottom end of the price range. In this price range, there was a smaller recovery in demand in Poland due to advance purchases. This only further increased the already high stock levels of PPH of plastics converters. We expect weak demand in the first weeks of August. If there will be a recovery in demand then it is only expected in the second half of August. Thus, the possible price increase, in any case, lags behind the monomer price change. We expect a price increase of 0-30 €/t.

In the third week of July typical PPC prices were in a range of  915-1,080 €/t in Central-Europe. Demand is weak, both in the injection and extrusion segment. The supply is wide, a smaller price increase of 10-30 € is possible.

PPR prices were in a range of 1,010-1,110 €/t last week. They did not change. Demand is weak, we have seen a recovery in the injection segment in Poland, but demand for pipe grades still falls short of expectations.

The table below shows the typical prices of the last week (total truckload 20-22.5 t):

Polystyrene grades 

Typical EPS prices were in a range of 980-1,040 €/t last week. Commodities were largely sold. In fact, no transactions took place. Converters expect a price increase of around € 30.

Last week GPPS prices were in a range of 990-1,100 €/t, while HIPS prices were in a range of 1,000-1,160 €/t. Demand for GPPS remains strong, with a significant portion of transactions occurring in the price range above € 1,050. The market expects a further rise in prices of € 20-50. Demand for HIPS is weaker than usual. A smaller price increase of 10-40 €/t is likely in August.

In the fourth week of July, natural ABS prices were in the price range of 1,320-1,490 EUR/t, they did not change. Few transactions have occurred. The industry is slowly climbing back. Supply and demand are balanced. Prices will probably follow SM price changes.