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The market is waiting for the events to come in February.

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

• BRENT oil price 70.42 USD/barrel, it is increasing
• EUR/USD: 1.2407 1
• NAPHTHA: 594.42 USD/t, increasing price tendency
• demand corresponding to January,

Demand tendencies in January are not clear and so are price expectations in February. 2017 polyolefin converters learnt that it was worth waiting with the monthly purchases. Reschedule purchases to the second half of the month. By that time polymer producers will be under pressure, then bargain will be easier, prices will be lower. Another special trait of 2017 was that there were longer pre-purchases. Many medium-sized companies tried to buy in advance, when the market was prepared for permanent price increase. In the year 2017 typically in August, November and December.  Now on the polyolefin market the effect of these strategies is palpable. Many sit and wait, as the supply is broad, with the exception of certain PPC and PPR grades. They have got feedstock inventories and continuously get purchasing offers. This is how it could happen that also in case of PE, PP, and PS there were prices cheaper in January than in December. And this gives further purchasing self-confidence to converters. They still keep waiting. Though in general it can be said that January is probably the month with the lowest prices in 2018. 

The increase of oil and naphtha prices seems to be unstoppable. Also new price forecasts expect prices this year to be higher, 75-80 USD/barrel. This will give rise to the increase of monomer prices as well. We do not expect dramatic price increase in February yet, in case of ethylene (C2) and propylene (C3) an increase by 0-25 Euro is probable, while styrene monomer (SM) is expected to increase by 50-70 Euro.  However polymer prices in North-America are detached from the European prices. This means a difference by 130-150 Euro in case of polypropylene. Though the strong Euro does not support export, but the price difference being higher than 10%, and the price tendency in North-America reduce the risks. Asian prices are higher than those in Europe, which direct the goods of producers in the Middle-East to the Far-East. In this way it can happen that the supply will get shorter and European producers can increase prices exceeding monomer prices, first of all in Western Europe.

Yet in Central-Europe these effects will be palpable only with delay, in the second half of February, but mostly in March. In this way polymer producers will be able to charge only the monomer price change to converters. Following the present price tendencies roll-over can be the final price change in February in case of polyolefin grades, with the exception of certain PPC and PPR grades. In case of PS there are real chances for price change following polymers. All this means that demand in February can be more dynamic, more pre-purchases can be anticipated. High demand and the increasing price tendency might, with some good luck, last until the end of May, until the middle of June.

Polyolefin grades

LDPE demand was low also last week.  Broad price ranges of 1,140-1,190 € persist. But most deals were made in a range of 1,170-1,190 Euro. It is typical for the lack of demand that the major producer of the southern region was forced to reduce its prices by some 30 Euro.  The season has not started yet, but converters had significant pre-purchased inventories. The question is whether polymer producer can charge the monomer price increase expected in February to the converters? With the present price tendencies there are low chances for this. The most probable thing is a price increase by 0-10 €.

HDPE market is still low, CE polymer producers start losing their patience.  Typical prices still fluctuate at about 1,100 € in the region. But now in the Czech Republic we can see prices slightly higher than 1,000 Euro. In this way the Central European price band became broader. HDPE prices are in a range of 1,020-1,150 €/t depending on the grade and application. But the expected slight monomer price increase will now hardly effect the prices. Price increase can be expected only if the price level in Western-Europe and also demand in Central-Europe will increase. This is expected in the second half of February.

The HDPE pipe (100) price range was 1,360-1,440 € with low turnover.  Polymer producers can realize significant sales only by offering one-time, not public discounts. This stimulated pre-purchase foreshadows that pipe producers expect a better season than in 2017. Infrastructural projects expected for 2017 are also anticipated to start.

Though LLDPE C4 prices did not change, they are in a range of 1,130-1,170 € in Poland.  In other parts of Central-Europe rather prices in a range of 1,170-1,210 Euro are typical. Supply is good. Prices are expected to increase by 5-15 € in February.

The typical mLLDPE prices did not change, they were in a range of 1,270-1,300 € last week in the region. 

On the PPH market demand was short.  In particular in the southern region, where converters have purchased less due to the lacking demand and because of the “fishy” price situation. One of the PPH producers offers his products by far below the market prices, but the availability of the product is limited. Converters try hard to decide which is the real price? Part of the picture is that on the Turkish market in the meantime PP (H) prices started climbing, which opens up export possibilities as well. In this way, in the SCE region oversupply-low prices might suddenly shift into shortage and price increase. Polymer producers will almost for sure try transfer monomer price increase in February. With success in the southern and central region.  A price increase by 0-10 € is to be expected in Poland.

PPC prices vary in a range of 1,170-1,200 Euro in Poland. In the other parts of Central-Europe the prices are higher, in a typical range of 1,190-1,260 €. The demand for more special grades is high, supply is lower, and prices are stable. In this segment monomer prices will probably increase in February by 10-20 Euro.

On the PPR market the typical price range is 1,270-1,360 €. By the end of January there will be a slight shortage. Now certain grades are hard to get. This means that monomer prices will increase in February by 10-20 Euro.

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

Polystyrene grades

On the EPS market in January it was possible to sell only at December prices or by 20-30 € cheaper. The start of the construction season is expected by March. 2018 is expected to be a very good year in construction in Central-Europe. Converters are preparing for this. Now they have high feedstock inventory levels, based on the experiences of last year they also try to keep them high. This means continuous purchases, but not at any price. The price drop in January is also a result of this. In case of the expected SM price increase by 50-70 € an EPS price increase by 0-30 € is expected in February.

The GPPS, HIPS market is also on the go, demand and supply are good.  We were not confronted with supply problems last week. Still GPPS from Iran is the cheapest, it is offered in a range of 1,250-1,280 €.  Prices of WE polymer producers: in a price range of 1,420-1,500 €, while Central-European producers offer their products in a range of 1,350-1,450 €, depending on the grade and application area. There are sufficient quantities of HIPS both from Europe and from outside of Europe as well. At the present cheapest HIPS from Iran is available in a price range of 1,300-1,350 €.  In the price range of 1,500-1,600 € the supply of materials made in Europe corresponds to the average.  In this way in case of GPPS and HIPS a price increase exceeding monomer prices by 20-30 Euro is probable in February.