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Uncertain price expectations in July

The following factors influenced “commodity” polymer prices and price expectations last week:

• balanced supply,
• balanced demand,
• BRENT oil price 45.22 USD, tendency of dropping prices
• EUR getting stronger, EUR/USD exchange rate permanently close to 1.12
• increasing import from outside of Europe, first of all in case of GPPS and PPC

In detail

The polyolefin market is waiting. This one thing is certain. Views differ, according to the opinion of polymer producers a slight price increase is probable, plastic converters expect price decrease instead. Whichever is going to happen, there will be no dramatic price drop or increase. The following facts are in favor of the price reduction:

• Dropping spot monomer prices, both in case of C2, C3 and SM.
• The maintenance season of the first six months will be over soon, monomer and polymer supply is increasing.
• The strong Euro has a positive influence on import, thus import supply is increasing continuously, and the arrival of major PE and PS quantities is to be expected in July and August from the Middle-East and from North-America.

The following are in favor of the price increase:

• Polymer producers try getting their margin lost during the last months back.
• The lower price ranges of polyolefin prices are slowly getting close to the lowest level of the last 2 years.
• Also buyers are ready to accept a minor increase.

Many buyers wait to see when it is expedient to start buying in advance, and when prices hit bottom. Will prices decrease further or start increasing? The risk of waiting is now low, as the expected price movement range is 20-30 € only both in case of PE and PP.  Now the market (buyers, suppliers) expect dropping ethylene and monomer prices (-20-30 €) which can result in price reduction to a similar extent on the market.  The market has considered this price decrease in the prices for the end of June, deals at the end of the month were made at prices by 20-30 € cheaper than at the beginning of the month.  In our forecasts we anticipate even lower price changes by 20-30 €.

The PS market is still balanced. This week the July price of SM came into the focus of interest. In particular as spot prices in Europe also started decreasing. Market players were so far sure that prices would increase in July as well. However these expectations seem to come to a halt. The reasons:

• Dropping spot styrene monomer prices already mentioned,
• Continuously growing import GPPS and HIPS supply,
• In case of EPS one of the major Central-European producer tries to obtain market shares in the southern and central region.

All these events make market players uncertain, at any rate no major price change (up or down) is to be expected.  

Polyolefin grades

In case of LDPE the price ranges are unchanged.  The lowest prices remained within the still very broad range of 1,130-1,220 €.  The price range for medium-sized buyers is 1,230-1,270 €.  Here there are also sufficient quantities of goods available. Last week the increase by 30 € at one of the major WE producers can be regarded temporary only, there was no quantity of goods to be supplied, means no tendency.  Prices in July are still an open issue. Plastic converters anticipate a price drop by 20-30 €.

Low HDPE demand continues.  Prices did not change compared to last week.  The typical price range in Central Europe is, depending on the grade, 1,100-1,200 €, prices are stable.  Plastic converters anticipate a price drop by 20-30 € following monomer prices.

The pipe market is still stable, sellers reported a good demand. The pipe season seems to be slowly starting. Now HDPE Pipe (100) feedstock can be sold within a price range of 1,270-1,350 €. Market players anticipate a dropping ethylene price, and a price change not completely following this (-20-0 €).

LLDPE C4 prices are unchanged compared to the last week in the region.  Short supply is still typical. The typical price range is 1,150-1,200 €. Market players get prepared for a price reduction by 20-30 € with the ethylene price dropping.  In Poland, as a result of recent price reduction of C4 stretch film producers also reduced prices of ready products. Thanks to this price strategy they received a lot of orders and utilize 100% of their capacities. In this way it is good news that in July the arrival of major import quantities from the Middle-East can be expected, stabilizing the supply also in Central-Europe.

Last week the demand for mLLDPE was consistent, prices did not change, we have measured lowest prices within a range of 1,210-1,270 €, while in the central region the price range is still 1,260-1,300 €. Plastic converters anticipate a price drop by 20-30 €.

PPH demand is consistent.  The price range of simple grades is still 1,050-1,100 €. Grades with a higher melt index and higher added value are typically traded within a range of 1,100-1,200 €.  It is good news that neither the Romanian, nor the Serbian producer reduced their prices last week. The market players anticipate dropping propylene prices and a price drop by 20-30 €.

In case of  PPC it is a problem in the region that individual WE producers strategically not interested in the launch lots on the market of our region at very low prices which cannot be considered as market prices, as they can be even by 40-60 € cheaper than the real market prices.  Real market prices remained unchanged compared to the last week. Large buyers can buy in a price range of 1,180-1,210, medium-sized ones in a range of 1,220-1,270 €.  Market players anticipate a polymer price decrease by 20-30 €.

In case of PPR we experienced no price changes. The price range is 1,200-1,315 €, depending on the grade, demand and supply are good. Market players anticipate a polymer price decrease by 20-30 €.

The prices of the last week and the price ranges expected for early June are presented in the table below (full truck load 20-22.5 t):

Polystyrene grades

Import has slightly influenced the prices, mostly in the bottom price ranges in case of GPPS and HIPS, but this did not mean a price drop.  Market players, buyers do not anticipate significant price changes in July.  For the time being even the direction is a question mark, as the SM price underwent a downward correction, but PS prices from European source show an increase.

In case of EPS the main season starts in July, in this way a growing demand can be expected, supporting the price increase.  In the second half of June neither the producers nor traders bombed converters with offers, all was sold out. In this way we cannot talk about price reduction, prices remained stable also last week. The typical price range is 1,320-1,400 € in Central Europe. In the southern region we measured the cheaper price range (1,320-1,360 €) while in the central region the typical price range is 1,340-1,400 €. On the Polish market the price range is 1,330-1,380. A price change following monomer prices is to be expected.

GPPS demand is good, supply is broad.  There is a strong, increasing import supply from Iran, Saudi-Arabia, Egypt and Russia alike. But the price of Russian products is not significantly lower than the market prices, with the exception of Serbia, where because of the exemption from customs duties Russian GPPS is by almost 100 € cheaper than the import from Europe and from the Middle-East.  The range of lowest prices was 1,220-1,380 € last week, this is almost identical with the price range in May.  But the typical price range of European grades is 1,290-1,360 €/ton. In case of monomer price increase the price change of GPPS does not reach that of the monomer, while in case of the drop of SM prices the GPPS price reduction exceeds the same.

In case of HIPS demand is good and supply is stable.  We experienced no change compared to last week. But the prices of European grades are stable, the typical price range was 1,400-1,480 €/ton last week. While import from outside of Europe is by 20-50 € cheaper.  A price change following monomer prices is to be expected.