Price Report Abstracts August 2011

The following information is provided by Plastics Information Europe.  For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read entire versions of the following reports, go to www.pieweb.com and sign up for a 48-hour free trial!

Standard thermoplastics in August 2011: Worldwide turbulence gradually settles / Month ends with firm rollover for PE / Margin losses abound / Notations likely to firm again in September

August 2011 will be remembered as an exceedingly turbulent month – and the same adjective can be used to describe the European polymer markets. Initially, it looked to be a relatively easy undertaking for producers to factor in at least the EUR 30/t rise in the cost of ethylene. However, at the latest in the second week of the month, the downgrading of the US credit rating, the negative direction of the worldwide stock markets and the significant slide in oil prices combined to slow polymer buying.

The signs pointed to a downturn on a broad front, which led all players to be extremely cautious and killed off any hopes producers may have had of winning a price increase. Polyethylenes and PVC retreated to the rollover line, while PP producers generally had little option but to pass on the EUR 15/t reduction in the cost of C3. PS and EPS producers were hit so squarely by the massive increase in the styrene contract reference price – up EUR 125/t – that nothing less than passing the full increase seemed to be an option. The consequence was that very little material was sold.

In the second half of the month, the much-feared economic crash failed to materialise and the apocalypse was postponed yet again. In fact, oil notations stabilised and companies in southern Europe gradually resumed their normal activities in relatively good spirits after the holidays. But despite their insistence, suppliers were no longer able to gain acceptance for the originally targeted increases. Despite this, the previously weak rollover for PE shifted to somewhat firmer ground, while HDPE producers even managed to push through minor increases. PP producers had little choice but to pass on their reduced costs, while PVC remained weak due to the fundamentally slack demand. Producers of the styrenic polymers PS and EPS materials were often left sitting on as much as 25% of the cost increases.

Following the recovery of the oil price, the downstream end of chains also stabilised again. The ethylene contract for September was settled EUR 5/t lower than in August, while propylene was fixed EUR 37/t lower. Preceded by the EUR 67/t fall in the benzene contract, at press time two styrene monomer contracts had been sold, the first EUR 42/t lower and the second EUR 32/t lower. Because producers are determined to take a stricter line to control the supply situation following their experiences in July and the shockwaves of August, it can be generally expected that markets will be more balanced in September. With the economic climate now relatively calm again, companies that took long summer breaks and those that depleted their stocks last month will have little option but to start topping up again. Producers’ recent calls for increases illustrate that they intend to make hay while the sun is still shining to lift sagging margins back to a more acceptable level. In most cases, prices can be expected to be stable to firm, and probably slightly above the cost increase.

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Standard Recyclate August 2011: Notations mostly stable / Minor declines seen for film recyclate at the upper end of the range / Procurement costs still high / Market's direction at the moment still unclear

Although prices for primary polymers were tumbling, notations for recyclate for the most part remained unchanged from mid-July to mid-August. Procurement costs had not changed, so that the tightly calculating recyclers could not afford to make any concessions. Among the bulk polyethylenes such as rLDPE, only the peak notations receded slightly. For most products, prices remained stable. Due to slacker demand, pipe grade rHDPE dropped by around EUR 20/t across the board while among the rPP grades only homopolymer – pressured by imports and off-spec competition – declined, by the same margin. None of the other secondary materials saw any change.

Supply volumes, procured at high prices, were mostly adequate. Demand was relatively quiet due to the summer holidays, but in many cases rather lively for the season.

Like the virgin polymer sector, the market for recyclate was jolted awake by financial market turbulence and volatile raw materials prices. These conjured up fears of another crash – despite the fact that industrial activity continues buoyant. As this report was prepared, players in the German-speaking countries in particular seemed confident that the good economy would continue. It will take until the end of the month, when negotiations on the ethylene contract begin, to determine which direction polymer markets will take. In the meantime, patience will have to be the watchword.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

Polyurethane feedstocks in August 2011: Expensive base materials pressure long TDI / Benzene surge leaves MDI cold / Flexible polyols down slightly / Maintenance shortfall will hit resurgent demand next month

Western European notations for polyurethane feedstocks remained mostly flat in August, despite the higher cost of starting materials. Even the EUR 132/t, or 18%, surge in benzene prices failed to move MDI forward and producers’ margins continued to deteriorate. The supply side also had no success in increasing the EUR 80/t premium for pure MDI. Although TDI production costs increased due to the EUR 90/t rise in toluene prices, notations for the isocyanate decreased by EUR 35/t on average. Producers of flexible polyols were obliged to grant rebates of EUR 25/t after pocketing some of the cost increase earlier. Notations for rigid polyols, however, rolled over despite the lower production costs.

As usual, demand was slack in August, even for insulation grades of polymeric MDI and rigid polyols used by the still lively building sector. Ordering of TDI and flexible polyols has been flat since the beginning of the third quarter. There were no unplanned outages, although planned maintenance turnarounds for MDI and polyols, along with revamping, combined to narrow the supply of some products.

In the final month of Q3, MDI and TDI producers intend to try to pass on cost increases and recoup lost margins. Polyols producers, too, are eyeing a price offensive, hoping to make up for the missed chances to pass on their own higher costs. As demand picks up in September, suppliers thus can be expected to push harder for increases.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

Engineering Recyclate August 2011: Notations remain stable to firm / rPA and rPC/ABS blends still tight / Demand appears to be holding up well / rPP compounds may come under some degree of pressure

The market for engineering recyclate was unbattered by the strong winds buffeting the oil and financial markets in August. Notations for all of the high performance secondary materials continued stable and firm. In particular, natural grades of polyamide were under steady upward pressure. Recyclers still had to contend with extreme tightness, especially as regards automotive grades of ABS, PC, PC/ABS and all polyamide products. More and more converters have begun using their own production scrap or handing it over to toll manufacturers.

All suppliers with whom PIE spoke in mid-August said that demand continued very strong. The only influence of any importance was the prevailing summer vacation season; the financial turbulence had not yet impacted market developments. Most regular buyers sought additional recyclate to keep costs under control, suppliers said; however, not all new orders could be fulfilled, as inventories of virgin polymer scrap were of course finite. Looking toward September, players in the engineering recyclate market will be banking on continuously growing demand, especially as the summer hiatus in the Mediterranean region comes to an end and swells order books. As recyclate suppliers already are having difficulty delivering on time and production scrap remains tight and expensive, firm or rising notations will be the most likely scenario in late summer and early autumn. The unclear direction of the worldwide economy will add an element of uncertainty.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

PET August 2011: Price slide comes to a halt / Cost rises drive polymer notations back up / Asia still calls the tune / Import pressure eases / Sluggish demand / Upward momentum to continue in September

Against a backdrop of rising Asian notations, European PET prices rebounded in August after months of decline. Driver of the developments farther east was the in some cases surging Chinese demand for polyester-based manmade fibres. Dwindling imports meeting up with reduced European capacity helped firm prices in this region. The only diverging influence was slack domestic demand, as financial and oil market turbulence made buyers cautious. In the end, prices rose by around EUR 25/t. As the Asia factor will continue to influence the PET market in September, buyers can expect higher European prices.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

Composites/GRP August 2011: Little activity in core holiday month / Demand for resin unlikely to pick up before mid-September / Stimulus expected from "Composites Europe" fair / Glass fibre tends slightly softer

The month of August was characterised by a sense of holiday calm, which probably explains the slight decrease in the price of medium-reactive ortho resins. Although the rise in the styrene (SM) contracts – which came on the heels of a combined two-month drop amounting to EUR 170/t – averaged EUR 125/t, this increase was unable to prevent the EUR 30/t fall in resin prices. It is unclear if August’s SM contracts even slowed the downward momentum. Propylene continued its downward trend for the fourth consecutive month, albeit by a less severe EUR 15/t. The Q3 contract for maleic anhydride was also down, marking an end to the material’s upward spiral, which had started at the beginning of 2010. By contrast, August’s phthalic anhydride contract rose by a fairly substantial EUR 30/t.

Demand was rather modest, as is customary for this time of year, with maintenance turnarounds and summer shutdowns dominating the picture. As a result, most grades were available without restrictions in August, although a few specialised formulations did experience hiccups because resin producers initially manufactured only standard material following the production restart.

When Q3 first began, glass fibre producers were hoping to raise prices. But, as things turned out, many of them not only failed to secure an increase, some even had to accept a reduction in cases where orders were not linked to a long-term contract. There were no reports of longer delivery times or even bottlenecks for any materials.

With some parts of Europe – including southern Germany, for example – still in holiday mode, any signs of demand picking up again are few and far between – a reality that is allowing many converters to work off some of the orders they received during the boom in H1 2011. In Germany, for example, the number of new vehicle registrations filed in August was down across the board.

Looking towards September, both distributors and converters see a certain scope for negotiation on resin prices, although the direction is by no means certain. In all likelihood, the high level of demand will probably weaken somewhat across various sectors in the near future due in part to the reluctance to invest in southern Europe – a situation that is affecting the economies of other European countries, too.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!

Engineering thermoplastics in August 2011: ABS and PBT rise despite holiday lull / Monomer reduction prompts fall in PP compounds / Bottlenecks ease as demand declines / Automotive still lively / Risks of price increases remain

As expected, European engineering thermoplastics prices mostly remained stable at a high level in the main holiday month of August. Solely as a result of rising feedstock costs did ABS and PBT notations rise by an average of around EUR 50/t. The only engineering materials to go down were PP compounds, slipping ever so slightly by EUR 10/t in response to the minor fall in monomer costs. All other engineering polymers covered in this report rolled over.

With the start to the main vacation period in southern Europe, demand for engineering thermoplastics declined considerably. As a result, the bottlenecks with PC and PBT – caused by a shortage of feedstocks – eased slightly. Even POM was more readily available despite the supply problems still overshadowing the production relocation. In fact, some producers of ABS, PA and PP compounds even had to reduce output to maintain the right market balance.

In the first week of the month, stock markets plummeted in response to the downgrading of the US credit rating, dragging oil prices down with them. With business slack anyway amid the holidays, buyers saw good potential for lower prices, putting an even bigger damper on sales of engineering thermoplastics. Irrespective of this trend, orders from the automotive segment continued to flow in at a steady pace.

To make up for previous increases in the cost of benzene, several PC producers have meanwhile announced rises of up to EUR 220/t, while PA producers are targeting hikes ranging up to EUR 100/t and PBT suppliers of up to EUR 350/t. Even though feedstock costs are once again declining, there remains a significant risk of thermoplastic price increases. For now, imports are preventing POM producers from obtaining any exaggerated increases, while ABS producers are trying to neutralise the cost reductions by cutting back on production. By contrast, the indexing system means the drop in monomer prices will result in a further softening of PP compound notations.

For more than 34 years, PIE has been an invaluable source of information for European plastics industry decision makers - a quick, yet in-depth look at the development of plastics markets and polymer prices. Available online 24/7 and as a printed newsletter twice a month. To read the entire report, go to www.pieweb.com and sign up for a 48-hour free trial!