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Low demand in October

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

• balanced demand in Europe, good autumn season in Central-Europe
• broad supply
• BRENT oil price 56.25 USD/barrel, tendency of  fluctuating prices,
• EUR getting stronger, EUR/USD: 1.1864
• Naphtha: 506.56 USD/t, price increasing compared to the first half of the week
• plastic converters buy only what is absolutely necessary,
• the price of ethylene, monomer increased by October (+30 €/ton),
• SM price decreased (-110 €/ton)

In detail

In case of the polyolefin grades the price increase was practically accepted, at least by the buyers who had to buy because of the continuous productions or due to quantity-based contracts. The average rate of the increase followed that of monomer grades, to a variating extent depending on the polymer grade concerned. But these buyers also tried to minimize their purchases, as in August and in September, anticipating the price increase, they filled up their warehouses. Now in October the emphasis is on the optimizing of the inventories. The market is sure that price will drop. Some expect this to happen as of November, some as of December. One thing is sure: the demand for plastic finished products and price traditionally start decreasing as of the middle of November and the price reduction will last through December. Plastic converters expect this now as well.  For this reason they try to keep their inventories on a low average price level. They reduced their purchases in October (that are probably associated with the highest prices in the autumn season), using their inventories purchased earlier. Many anticipate the November price decrease, but this depends on the price change of monomer grades. We cannot give a reliable forecast about that yet. At any rate neither the crude oil, nor naphtha prices justify a price reduction for the time being. In spite of this may plastic converters are confident about cheaper price in November and retain their purchases in October. Also polymer producers feel the retained demand, they report a demand in the average by 10-15% lower than in September. Several polymer producers reduced their initial prices in October by 10-20 €. Others have started sales promotions, by rewarding the purchase of surplus quantities by immediate rebate (10-20 €/t). But for the time being converters do not buy more. There are two reasons for the retention of purchases: on one hand the decreasing price expectations, on the other hand traders still have significant quantities of goods purchased earlier they can launch on the market below the level of the producer prices in October. The uncertainty and the “lacking demand” are easy to see as two polyolefin producers in the southern region did not change their prices compared to the end of September. Converters using polyolefin reported a good season, a good volume of orders, but with the end of the season getting closer they came to be more precautious and this cautiousness appears in the form of reduced demand at the polymer producers. The question is, whether it is possible to enforce price reduction by retaining the demand in case monomer prices are slightly increasing or remain unchanged on the market. November will give the answer.

Looking forward to January it is important to mention that in Poland, in line with the general European practice, the environmental product fee for sachets and carrier bags with a wall thickness of 15-50 micrometer will be introduced. The fee will expectedly amount to 0.2 PZL/piece.  All this will initially result in the drop of the demand like to other countries. Expectedly this dropping demand affecting first of all polyethylene grades will affect other countries of the region as well. From the Polish market that was also so far characterized by oversupply goods will move to the south and to the east.

On the PS markets prices in October were clarified early last week. In case of GPPS, HIPS European polymer producers have reduced prices to an extent lower than in case of the SM price change. This does not seem to be sufficient for the market, as products imported from outside of Europe are still by 100-150 € cheaper. Converters try finding the cheapest products here and now. The next month is less interesting, SM price change is almost impossible to forecast. Polymer producers do not follow monomer price changes either. All this opens an increasing space for import from outside of Europe (Iran, Korea, Pakistan etc.) and from Russia.

Polyolefin grades

The typical LDPE price range is 1.250-1.320 € (DDP) in the region.  The price range is not unusually broad, but it is interesting that in Poland and in the southern region most contracts are made within a range of 1,250 – 1,280 € while in the central region a price range of 1,270-1,320 € is typical. 

LDPE supply is everywhere good, shortage was not reported from anywhere.

In case of HDPE buyers who have already bought realized a price increase by 20-30 €.  Spot buyers and buyers who were waiting realized less. BM and IM grades are still to have at distributors and at some regional producers still at prices from the end of September.

The typical price range in Poland: 1,050-1,130 €/ton, depending on the grade. Prices vary within a range of 1,060-1,180 € in the other parts of Central Europe.  Demand is low in all regions, supply is broad and abundant.

In spite of entering the autumn main season, the HDPE pipe prices are typically in a range of 1,340-1,420 €, depending on the destination of supply.  Demand is lagging behind the expectations, but this is not surprising, as this was like that all over the year.

Due to the traders and the moderate demand LLDPE C4 prices increased all in all to an extent lower than the monomer price change in Poland.  The typical price range is 1,190 -1,210 € in case of large buyers and 1,230-1,260 € in case of small ones. The typical price range is 1,220-1,270 € in the other countries of the region.

mLLDPE price range is broad and stabilized within a price range of 1,280-1,360 €.  The short supply forecast by WE producers did not cause problems, also because demand dropped.

PPH demand is lower than what is expected in September, both in case of Raffia and IM grades.  There are no problems with sales, but the dynamics of the price increase do no reach that of monomers. Converters could accept a price increase by 20-30 €.  Some regional producers still keep up the September price level. The typical price range is 1,130-1,220 €. The situation is worsened by the fact that there are materials imported from Russia at or even below 1,100 €.

The luck of the PPC market is that traders have sold their inventories purchased in August and September.  In this way purchasing in mostly possible within the price range of 1,250-1,330 €/ton.  Polymer producers recognized that they have to mitigate their initial offers, in this way most of the price negotiations last week resulted in price increase following monomer prices.

PPR demand is good, the typical final price range is rather broad, 1,280-1,390 €. This shows very well that polymer producers were forced in many cases to cut back on their intentions to increase prices.

The prices of the last week are presented in the table below (full truck load 20-22.5 t):

Polystyrene grades

PS prices did not follow or followed just moderately the SM price change.

In case of EPS small- and medium-sized buyers experienced a roll-over, first of all in case of insulating materials with fire-retarding properties.  Demand in this segment is so high that converters accept bids practically without bargaining. Large buyers could realize a price drop by 10-30 €. Supply is limited, the typical price range is broad, 1,570-1,700 €, prices depend on the size of the buyer and on the grade.

GPPS supply is broad.  European producers reduced prices by 70-90 €.  The price range typical for European products is 1,330-1,400 €.  But in the region we can see a very intensive presence of import from outside of Europe (Iran, Russia and South-Korea). The price range of import GPPS is 1,250-1,300 €.  The quality of GPPS from Asia is high similar to that of the GPPS from Europe, the significant increase of import from South-Korea is to be expected.

The supply of HIPS produced in Europe is still short.  A price reduction by up to 90 € happened last week.  But also here import from outside of Europe is present, with a typical price range of 1,350-1,400 €. In the meantime European products are available within a price range of 1,420-1,500 €.