Growing market tightness saw polymer price hikes by producers in December.
L/LDPE
Following a price hike of €35/tonne over and above the unchanged ethylene contract price in November, L/LDPE producers once again lifted prices well in excess of the feedstock cost rise in December.
While the December ethylene reference price increased €22.5/tonne compared with the November settlement, L/LDPE prices saw price increases averaging about €60-70/tonne in early December. However, strong buyer resistance led to more moderate price rises of €30-40/tonne by the end of the month.
Producers have been able to raise prices well in excess of costs because of output restrictions, market tightness and a lack of imported material.
Demand was more lively than usual in December as converters sought to maintain their stocks at a reasonable level.
A fall of €27.5/tonne in the January ethylene contract price could see small L/LDPE price reductions in January.
HDPE
In December, HDPE producers once more succeeded in raising prices well in excess of the increase in the cost base as a result of market tightness. The December ethylene contract price increased by €22.5/tonne due to supply concerns.
In early December trading L/LDPE suppliers managed to push through price gains of €60-70/tonne. As the month progressed however, buyers became more resistant and managed to restrict settlements. Blown film grades registered gains of €50/tonne during the month while injection moulding and blow moulding prices saw gains of €35/tonne.
Demand was better than expected in the run-up to Christmas. However given the supply shortages, particularly for blown film grades, many buyers did not get the volumes they had ordered.
In January, producers are likely to ask for a price rollover after the ethylene contract price fell €27.5/tonne.
PP
Polypropylene prices pointed upward in December after sliding in the previous month. The December propylene contract price settled on a rollover but producers managed to push through gains of €15-30/tonne to widen their profit margins.
Initially PP prices saw gains of up to €50/tonne, but the price pressure eased in the run-up to Christmas. Homopolymer injection and copolymer injection grades ended the month with gains of €30/tonne with homopolymer film prices up €15/tonne.
The price premium above feedstock was attributable to both healthy demand and tight supplies. The after-effects of the mid-year tightness due to the large number of plant outages remained in the market, with low inventories across the value chain. One major producer said in a letter to customers that it expected a shortfall in its ability to meet PP demand in December.
PS
In December, polystyrene producers continued to benefit from supply tightness to widen their profit margins. The styrene monomer reference price increased €35/tonne in December after receding by €30/tonne in the previous month. Suppliers demanded price increases in excess of the feedstock cost rise and GPPS prices added €45/tonne during the month as a whole. High-impact polystyrene grades held its price premium at €90/tonne despite a €35/tonne reduction in butadiene costs.
Demand was better than expected during the first half of the month but order intake tailed off as the Christmas holidays approached.
Supply tightness combined with the lively demand led some producers to run short of material and place customers on allocation.
PS prices could head downward in January after the styrene monomer reference price settled €20/tonne lower and the supply situation starts to ease.
PVC
PVC producers once again struggled to pass on the rise in ethylene costs to their customers in December. The ethylene contract price settled €22.5/tonne higher, implying a proportionate €10/tonne rise in PVC production costs. Producers wanted to at least raise PVC prices by the rise in their cost base but met with strong resistance. While some producers managed to push through small gains, most contracts were rolled over.
Order intake was down in line with expectations but better than would normally be expected in December, due in part to the very mild winter weather.
Although supply was low due to plant outages, producers were able to meet the demand without much difficulty.
PVC producers are likely to target a price rollover in January to boost their profit margins after the ethylene contract price fell €27.5/tonne.
PET
There was little movement in bottle-grade PET prices in December after feedstock prices remained stable. The paraxylene contract price settled on a rollover while the monoethylene glycol contract price fell just €5/tonne.
Producers had to give up the small margin gains they had achieved in November with most contracts settling at a slightly lower level.
The price decline was mainly the result of cheaper Asian imports. There is still however a moderate oversupply in Europe, despite producers curbing output and plant outages.
Lotte Chemical’s plant maintenance at Teeside in the UK works continue as planned and was expected to continue until mid-December.
As the bottle-making market was rather quiet PET demand was down in line with seasonal expectations
PET prices are expected to fall in January on lower contract prices for paraxylene and monoethylene glycol.
