06.03.2017, nur in Englisch verfügbar
Permanent price increase
The following factors influenced “commodity” polymer prices last week:
- polymer price increase getting more and more certain in March,
- the demand generated by plastic converters, their intention to buy in advance,
- monomer price increase in March: ethylene (C2) +30, propylene (C3) +50, styrene (SM) +90.
- BRENT oil price higher than 55 USD,
- missing import quantities, (Middle-East)
- high Asian demand,
- good economic situation in construction unfolding worldwide,
- strong dollar still getting stronger,
- the extending export possibilities of European producers because of the weak EUR,
As expected, monomer prices increased further. The ethylene and propylene price increase (by 30 and 50 EUR, resp.) was in line with the season start, not too high, in accordance with the expectations. However in case of styrene monomer the monomer price increase by 90 EUR is particularly high, in consideration of the price increase by 260 EUR last month. This is a significant price increase, but the market is forced to take it, as the demand is high. Polymer producers not only charge the increased costs to their buyers, but try to increase the “spread” as well in all three product groups. Because of the maintenance and the weak Euro monomer supply will remain short until the end of May, thus we shall be prepared for permanently increasing monomer prices during the next two months,
There is short supply on the LDPE market, but prices did not increase extremely, the typical price increase was 50-60 EUR (C2+20-30). The typical price range is 1,380-1,390 EUR. This is acceptable for the market as well. But LDPE supply will get shorter in April and in May due to the two months maintenance at Kazanorgsintez, which will reduce the import streaming from Russia and Belorussia into the region. In addition, on the Russian market the main season is starting. In this way the price increase significantly exceeding the ethylene monomer prices in April and May can be taken for granted.
HDPE spreads did not increase significantly at each producer any more. There are polymer producers who have increased their prices by C2+ 0-20, i.e. by 30-50 EUR, as they have significant inventories from certain FILM and BM grades. Other producers promised a price increase higher than this, by 70 EUR, however in our opinion and due to the not too dynamic demand, only a price increase by 50 EUR will be accepted by the market. Only the pipe market will be able to cope with a price increase higher than this, as the promising construction season for 2017 shall show up, as of March, also on the pipe market. In the HDPE 100 category a price increase by 60-70 € will be accepted on the market in March.
But PP buyers are not in such a comfortable situation, polymer producers came up with a price increase monomer (C3) + 30-50, in some cases by 60 EUR, which meant an increase by +80-110 EUR in case of PP polymers. The general PP shortage on the European market is behind the significant spread increase. The shortage is particularly high in case of certain PCC grades. This has shocked buyers. Packaging producers are in a particularly difficult situation, who are forced to increase prices before the end of the first quarter. The typical PPC price range offered by the producers is 1,310-1,350 EUR. The price of PPR increased, depending on the producer concerned, by 80-100 EUR, the lowest price measured by us was 1,325 €.
Smaller CE producers were at ease to recognize this and have increased their PPH prices significantly. The lowest price is now 1,180 EUR, but typical prices offered exceed 1,200 EUR. The typical price range is 1,210-1,250 EUR, depending on the grade and producer.
In March it is absolutely true that WE polyolefin producers tried to increase their prices higher than CE producers did. The reason is that they try to approximate WE and CE prices. There is also space for this because of the short supply resulting from the spring maintenance and the missing import. But for the plastic converters of the region it is hard to charge the price increase to their buyers.
In the following table the prices of the last week of February and the prices expected by March are listed.
||Polymer price ranges in March, 2017, Central Europe (€/ton)|
|HDPE blow molding
|HDPE injection molding
|HDPE pipe (100)
|LDPE general purpose
|PP co-polymer injection molding
|PP homo-polymer fiber
|PP homo-polymer injection molding
PS producers announced a price increase exceeding the increase of SM (90 EUR) by about 20-30 EUR. This means a further price increase of 110-120 €. Most buyers still think like this. Because of the start of the construction season and due to the low feedstock inventories insulation material producers are forced to buy, thus the March price increase will be enforced by smaller bargains (10-20 EUR). The typical EPS price range is expected to be 1,670-1,750 EUR in March. But the EPS consumers specializing in the production of packaging materials are more precautious, it is hard to charge the fast price increase to the buyers.
The situation is similar also in case of GPPS and HIPS users, because of the significant price increase (100-120 EUR) the substitution of PS e.g. with PP is already worth consideration, first of all in the field of packaging materials.
According to the expectations at the beginning of the year the steep price increase will continue until March, but no halt is in sight, market players expect further styrene monomer and polystyrene price increase. But this prompts PS consumers rather to buy instead of bargaining.
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