Price Report Abstracts January 2011
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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! |
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Articles: January 2011 |
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Standard Thermoplastics |
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Standard Thermoplastics in January 2011: Polyolefins and PS go through the roof with triple-digit rises / Only PVC calm / Supply tight / Demand robust / Cost pressure intensifies / Situation increasingly dramatic
For western European buyers of standard thermoplastics, the first month of the new year was a horror. With feedstock notations – whether ethylene, propylene or styrene – already sky high, January brought further triple-digit increases to most polyolefins and styrenics, and polymer producers made no secret of their firm intention to pass on the higher costs. With supply generally tight and demand lively, PVC and EPS were practically the only polymers to see just double-digit gains. LDPE crashed the EUR 1,500/t barrier, while PS stopped only just below the EUR 2,000/t figure typical of engineering thermoplastics. PVC and EPS remained bogged down in the snow and ice that put the building industry out of action.
With around 2m t of polyolefins consumed monthly in Europe alone, some EUR 200m of additional liquidity shifted from converters to suppliers in January merely as a result of the price increases. As always, it takes time for these increases to be passed on to the end-customers, a situation that has led to significant liquidity bottlenecks at converters. As a result, quite a few medium-sized polymer buyers were nearing the end of the credit lines granted by their suppliers. At the same time, the price escalation clauses normally applied in the end markets were gradually proving inadequate. Consequently, many converters face situations that can only be described as dramatic.
Among the polyethylenes, LDPE remained tight, while the linear low-density grades moved closer to being balanced again, following several months of a near surplus. The HDPE portfolio was extremely short as scheduled maintenance turnarounds coincided with yet more technical problems, resulting in fresh forces majeure. Imports were few and far between. PP copolymer was short, but the supply situation of other PP products was fairly balanced.
At the beginning of January, the waning holiday season slowed activity somewhat and later in the month the stiff increases announced by producers clouded any desire to buy. Nevertheless, demand in many segments was surprisingly robust.
An end to the misery is not in sight. In February, C2 and C3 climbed higher, even if the gains of EUR 25/t and EUR 35/t respectively were not as strong as a month earlier. As a result of the global explosion in benzene prices (up EUR 271/t since the beginning of the year), styrene soared by a triple-digit margin to heights that frustrated the market. Polymer producers have left no doubt as to their resolve to pass on these increased costs. No one wants to run the risk of insolvency; past experiences are still too fresh. With supply growing tighter and demand still rather resilient, notations for standard thermoplastics will inevitably continue to rise. Challenged converters will have to make the urgency of the situation clear to the end customers. In some cases, forgoing the sale altogether could well be the harsh reality in February.
Engineering Thermoplastics in January 2011: Petrochemical cost explosion hits engineering polymers / Benzene takes to new heights prompting triple-digit rises on a broad front / Upward momentum likely to continue through February
In the first month of the new year, European engineering thermoplastic prices were hit broadside by a massive wave of cost increases in the petrochemical industry. The enormous leap in the cost of benzene in particular resulted in triple-digit rises, up to EUR 150/t, in many downstream polymers, including for the big engineering materials based on ABS, PC and PA. PP compounds were not far short of the EUR 100/t barrier, rising by an average of EUR 90/t as a result of the considerable jump in the price of propylene. Like PET, engineering polyester grades also took to new heights due to the Asian fibre boom, and PBT climbed by as much as EUR 120/t. The EUR 40/t increase in the price of PMMA was modest in comparison. Only POM, which is tending short, remained largely unaffected by the increases, although – in view of recent announcements – this could well be the calm before the storm.
Polyamides and POM remain chronically short, while the other materials were for the most part adequately available. The basic fact remains, however, that special grades are still subject to long delivery times as a result of the serious shortage of fillers and functional additives.
Demand in January remained very robust, in particular from the automotive sector.
The rocketing benzene price took another EUR 122/t leap in February. Overall, in the first two months of 2011, this key feedstock has gone up by as much as EUR 271/t, equivalent to a rise of about 37%. It is obvious that this will have significant repercussions in all downstream segments. Producers are thus seeking at least triple-digit increases – calling for as much as EUR 350/t for standard grades. Prices for the even more expensive speciality grades are only quoted on request. Since imports continue to be few and far between and with demand stable at a high level, the main issue now is the size of the respective increase and not whether there will be an increase at all. Unfortunately, there is no end in sight to this upward flight.
Standard recyclate January 2011: Notations still climbing as new year begins / Hikes in primary sector drive the market / Material supply tighter / Fresh wave of costs leads producers to announce hikes
The cost wave that rolled through the upstream markets from mid-December to mid-January washed over into standard recyclate in German-speaking Europe, leading suppliers to pursue price increases ranging up to EUR 50/t. The more opaque grades of rLDPE rose by EUR 20/t, while transparent grades added around EUR 30/t. Due to the off-season in the building industry, demand for rHDPE was weak, although producers of blow moulding and injection moulding recyclate pushed through hikes of about EUR 10/t, mostly at the lower end, and rPP producers achieved most of the EUR 40/t increase they had been seeking. PS recyclate took a small step forward, by about EUR 20/t.
Surging demand for primary polymer governed the supply of material for recycling, whereby production scrap was especially scarce. At the same time, speculation limited availability of post-consumer waste. A large number of recyclers shut down over the Christmas and New Year holidays, due not least to a shortage of material that in some cases continued into January.
If the holidays restrained demand temporarily, in the second week of the month the run on secondary material, priced more reasonably than virgin polymer, was again in full swing. At the centre of buyer interest were rLDPE film grade, rPP and rPS. Demand this month will be boosted by preparations for the building season, but producers are concerned that they will have to put customers on allocation due to insufficient starting material. All of this means prices will move higher across the board.
Engineering recyclate January 2011: Momentum from primary market drives range upward / rABS and rPOM tight / Fresh FM limits rPA / Pipeline refilling and price surge for virgin polymer fuel demand
The price surge for most engineering plastics did not affect the recyclate market broadly from mid-December to mid-January, as most large contracts were settled earlier in December at the old prices. Most notations for engineering recyclate remained stable, but recyclers used the higher virgin prices as a calculation basis for their short-term orders. The upper range of rABS and some grades of rPA and rPC gained as much as EUR 100/t.
Tight production scrap from converters was having a negative effect on output of recycled ABS, PA, POM and PP. Pipeline refilling at the beginning of the year also limited supply as did competition from converters seeking a respite from the high prices in the primary market. All this combined to delay deliveries.
In many automotive plants the assembly lines were kept running during December, except on the major public holidays. To keep up with orders from OEM suppliers, polymer recyclers had to re-start their own plants fairly soon. Early in the new year, demand from the E&E sector picked up again.
From the early days of 2011, recyclate producers were confronted with procurement price increases that they found difficult to pass on in full. Due to the hits margins for most engineering recyclate have taken in the recent past, producers in the secondary segment have told PIE they will try to lift their selling prices during Q1.
Polyurethane feedstocks in January 2011: Higher costs have limited effect on polyols / MDI in weak rollover / TDI slips again / Plants in winter mode / Sluggish demand / Producers likely to seek hikes soon
The unexpectedly large rise in the cost of petrochemical feedstocks had relatively little effect on notations for western European polyurethane materials in January. Thrown off guard by the leap of more than 15% in the cost of benzene, producers struggled to find a strategy but as the full effect on the cost mix became apparent, they announced rises of up to EUR 150/t. However, the only upward movement this generated was an extra EUR 65/t or so for flexible polyols. With the building industry in off-season, MDI barely held onto a weak rollover, while TDI continued downward by EUR 40/t.
The two short working months of December and January again reduced demand, although the effect was not as noticeable as in previous years. Existing stocks and output from western European plants – most of them operating in winter mode – were sufficient to meet demand. Automotive orders for TDI and flexible polyols improved week by week, but insulation materials producers, as expected, showed little interest in polymeric MDI or rigid polyols.
Following the unexpected feedstock surge in January, price hikes are likely in the second month of Q1. Worldwide, petrochemical spot markets were still very restless over the past month and some materials saw gains of up to 10% in some regions. The triple-digit rises in the propylene (C3) and styrene (SM) contracts at the beginning of the year are not likely to be translated in full downstream, but nevertheless are bound to have a fairly significant effect on the cost mix for PU starting materials. In other world regions, producers have already taken the offensive and announced price rises of up to 15% for February. Although insiders expect supply to be more or less adequate, the ongoing positive economic situation and the gradual pick-up in seasonal business could well drive notations for polyurethane materials up.
PET January 2011: Higher costs are passed down the chain / Brisk Asian demand for polyester fibre continues to pressure European market / No relaxation on the price front in store for February
European PET notations continued to rise in January as the petrochemical cost wave continued to roll and producers successfully passed on in full their higher prices for the PX/MEG feedstock mix. Spot prices also continued to climb throughout the month. Other regions of the world saw similar development. As the import shortage persisted, European supply was balanced without reserves. At the same time, demand was unusually good for the time of year. There seems to be little doubt that PET prices will follow cost movements upward in February, especially in view of the EUR 130/t increase in PX sot prices in January.
Composites/GRP January 2011: Steep hikes for ortho resins and glass fibre / Standard chopped strand mats the only exception / Demand curve pointing upward / February looks likely to be quieter
The breather from price hikes seen in December 2010 ended as the new year began. As demand continued lively, converters were confronted with announcements of price increases both for medium reactive ortho resins and most glass fibre products. The impulse for the resins rise was the price surge upstream. Styrene monomer (SM), for example, saw double-digit increases. On a more positive note, there were no reports of delivery delays or customers on allocation as in the recent past.
European converters stand to profit from the EU’s reduction of anti-dumping duties for Chinese-made glass fibre from 43% to 13%. Good news also was the restart of the 3B plant at Birkeland / Norway, even if at press time the company had not yet lifted force majeure. The commercial vehicle industry is revving its engines and is climbing up close to POV assembly figures, while at the same time there is additional demand for sheet, seals and profiles for generators.
The building sector was not exactly booming in January, as the season is not due to start for another four weeks or so, but the milder weather compared with December brightened the overall picture. During February, resins producers will focus on pushing through previously announced plans for price increases, and there are not likely to be any more announcements this month. Starting in March, the picture could change. Some converters are already bracing for higher prices, as contracts for the key aromatics were fixed slightly higher than in January. Generally speaking, a relaxation on the feedstock front does not seem to be on the agenda before March.
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!
