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Polyolefin roll-over, polystyrene price increase

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

• BRENT oil price, 63.57 USD/barrel, stagnating
•  EUR/USD: 1.1884, fluctuating
• Naphtha: 571.73 USD/t, slightly dropping
• Ethylene C2: +32 €/t,
• Propylene C3: +32 €/t,
• Styrene monomer +95 €/t,
• polyolefin demand is still low, there is just a low number of transactions on the market
• Low PS supply, high demand

There was just a low number of polyolefin transactions last week. Polymer producers and converters alike are waiting for the December contractual prices. Due to the “sit and wait” strategy last week the PE and PP inventories of polymer producers alike started growing. According to the agreements made on Thursday both the price of ethylene (C2) and propylene (C3) increases by 32 €/ton. This corresponds to the expectations. Though it is important to note that spot monomer prices were also on the last day of November by far below the December contractual price. But due to the short month of December and the low demand in November there are low chances for the price increase. Regional producers are realistic, they will probably come up with roll-over. But WE producers will probably try to enforce the monomer price increase. But the market is now less willing to accept increasing prices. What is more, in case of certain grades, HDPE in particular, the market expects rather a slight price drop. At least here in Central-Europe. Converters, for the time being, according to their plans, buy only as much as to cover their needs in December. But should prices, as usual, slightly drop at the end of December (by 20-30 Euro) then it is probable that quite a few will buy in advance for the first quarter of 2018.  All in all polymer producers have a chance to have a successful December. A December running like this can be a good basis for a probable price increase in January.

Now polyolefin producers are willy-nilly faced with the part of the petrochemical cycle being the most unfavorable to them, dropping margins.  The process has been choking the market since May, but until November real margin sacrifice could be avoided, but due to the weak November and to the resistance of converters the reduction is unstoppable. A significant spread increase is not probable in the first half of 2018 either, due to the import from outside of Europe getting more dynamic.

The SM price change is in line with the expectations, +95 Euro/ton. However, due to the short PS supply being typical as of the middle of November European PS producers try to enforce a spread increase by 30-40 € on the market.  But the price increasing intentions of the European PS producers can be counterbalanced by the fact that by December major shipments from outside of Europe will arrive in the region. First of all from Iran, and to a small extent from Russia as well. And with regard to PS the month is short, too.

Polyolefin grades

Spot LDPE sales have further pushed down prices last week.  Polymer producers try reducing their stocks by custom-made offers.  The range of reduced prices was 1,130-1,180 € (DDP) last week.  The cheapest prices  - 1,130-1,116 - €/ton are typical in the southern region. For the time being demand is lowest here and this is not going to change in December either. Also the polymer producers of the central region report about a low number of transactions. Some buyers indicated they would buy, but the prices proposed were unrealistically low. In the first half of December we expect a price range of 1,150 – 1,220 €.  In the second half of December prices can drop even by 20-40 €.

Due to the low HDPE demand prices dropped further. It is hard to establish a general market price, as there are still positions with extremely low prices below 1,000 on the market. Such as the Ukrainian HJDPE, which is offered even at prices of about 950 € on the market in higher quantities.  But relevant regional producers try to keep HDPE prices above the monomer price. As HDPE price increase is not probable, now we are in the weird situation that most HDPE prices in December will be below the monomer prices. What is more, negative spread can grow further if producers continue reducing prices due to the demand.

HDPE pipe (100) market is stable and so is the demand, the typical price ranges did not change last week, the range was 1,330-1,400 € last week.  Here polymer producers will probably be able to increase prices following monomer prices. Semi-commodity products, for the time being, seem to be able to keep their margin. We expect prices in December to be within a range of 1,350-1,420 €.

LLDPE C4 prices changed last week to be aligned with the demand. There were prices drops by 10-20 Euro in the lower section of the price range, but the typical price ranges did not change.  The typical price was 1,140 -1,170 € in case of large buyers and 1,190-1,240 € in case of small ones in Poland. In the other countries of the region the typical price range was 1,200-1,250 €.  We expect similar prices for December as well.

MLLDPE prices were unchanged last week in the region.  The price range was 1,220-1,300 €, though converters have not received offers yet. But they expect that for December the final agreement will be unchanged prices.

PPH demand is low. Low number of buyers interested and buying. In the region the typical price range was 1,020-1,160 €, depending on the grade and on the size of the buyer. Though producers would be in a dire need of a price increase, and many will also try one, but there will be probably rather roll-over and in case of raffia grades a smaller price decrease in December. 

On the PPC market there is no pressure to sell, there are no superabundant inventories. WE polymer producers will come up with a price increase, but in the end roll-over is probable.  The typical price range did not change compared to last week, 1,150-1,220 €/ton, depending on the grade and application area. Compared to early November, early December we expect unchanged price, meaning a price range of 1,170-1,230 €, but after the 15th of December prices might return to the 1,150-1,200 Euro price range.

The PPR market remained in the 1,220-1,300 Euro price range. It is here where polymer producers have the lowest chances to increase prices, which will mean a price range of 1,250-1,340 € early December. 

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

Polystyrene grades

The short supply of the last two weeks “starved” buyers. But the expected “spread” and monomer price increase will cool them down. By December materials from Iran will reappear on the market, thus reducing prices. In this way, all-in-all in December a price increase following monomer prices is the most probable scenario.

EPS demand weakened, but supply is limited, too. Weather changes will bring about a significant drop in the demand in December. The typical price range was 1,500-1,620 € last week, there were just a few deals made.  By December we anticipate a price increase by about 100 €.

High GPPS demand met limited supply, there was just a low number of deals made last week.  In the present price range - 1,280-1,350 €/ton. By December, in case of the products produced in Europe we expect a price increase by 100-120 €, while the price of products imported from outside of Europe will increase by 40-50 € only. In this way the price range will become broad again (1,320-1,470 €/ton).

The price range of HIPS was 1,310-1,400 € last week, tendencies are similar to GPPS.  By December, in case of the products produced in Europe we expect a price increase by 100-120 €, while the price of products imported from outside of Europe will increase by 40-50 € only. In this way the price range will become broad again (1,360-1,550 €/ton).