Price Report Abstracts July 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 Recyclate July 2011: Secondary market unfazed by lower primary prices / Gains for rHDPE / Plastics waste still costly / Building industry dominates buying / Higher feedstocks end virgin price slide

The mostly medium-sized European standard thermoplastics recyclers failed to benefit from the monomer-dictated downward correction in prices for primary standard thermoplastics at the beginning of July. Procurement costs remained unchanged on a high plateau and margins were suffering, but any attempts at raising prices met with opposition from converters. With an eye to falling prices for virgin polymer, they refused to pay more. Recyclate notations also saw no downward correction from mid-June to mid-July. Only the upper end of the rLDPE film scale receded, by around EUR 20/t, while the lower end moved upward by the same margin. The other rLDPE grades mostly saw a rollover.

Prices for rHDPE pipe grade were flat, but the other HDPE materials gained EUR 20/t. Notations for rPP and rPS were unchanged. Supply of recyclable material normalised for the most part. As demand held up well despite the summer holiday period, recyclers kept production capacities running flat out. With some regular customers ordering smaller volumes, they finally had a chance to supply new buyers. With the agricultural and gardening season waning, most orders came from the building and automotive industries. Rising feedstock costs and converters' dwindling inventories are signalling an end to the downward momentum of primary polymer notations. Whatever happens, recyclers plan to defend their own prices in August.

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The approaching peak summer vacation season, longer inventories along the entire production chain and the sharp downward correction of starting materials prices combined to increase pressure on west European notations for polyurethane feedstocks in July. With gains of EUR 10/t on average, polymeric MDI was in a strong rollover. At the same time, producers of pure MDI were unable to realise a targeted EUR 100/t price hike and had to settle for EUR 85/t. Despite higher production costs, TDI notations sank by EUR 50/t, while polyols producers were able to pocket some of their nearly triple-digit cost decline, conceding only EUR 40/t. As the summer lull dampened demand, the production bottlenecks eased. Several producers completed outages and maintenance turnarounds. If there were any shortfalls at all, it was for polyols. Orders for most of the standard PU components could be filled without delay. Seasonal demand buoyed orders for insulation materials based on polymeric MDI and rigid polyols, while demand for TDI and flexible polyols lost momentum toward the end of the month. In August, MDI orders are expected to come off their peaks, due to the summer lull but also to sinking benzene prices. Even with production costs on the rise, slackening demand will keep TDI under pressure. Polyols producers’ lower cost base could strengthen buyers’ chances in the upcoming price talks.

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Polyurethane feedstocks in July 2011: Monomer decline ends price rally / MDI in a strong rollover / Moderate losses for TDI, polyols / Vacation season dampens demand / Lower costs improve flexibility

The approaching peak summer vacation season, longer inventories along the entire production chain and the sharp downward correction of starting materials prices combined to increase pressure on west European notations for polyurethane feedstocks in July. With gains of EUR 10/t on average, polymeric MDI was in a strong rollover. At the same time, producers of pure MDI were unable to realise a targeted EUR 100/t price hike and had to settle for EUR 85/t. Despite higher production costs, TDI notations sank by EUR 50/t, while polyols producers were able to pocket some of their nearly triple-digit cost decline, conceding only EUR 40/t. As the summer lull dampened demand, the production bottlenecks eased. Several producers completed outages and maintenance turnarounds. If there were any shortfalls at all, it was for polyols. Orders for most of the standard PU components could be filled without delay. Seasonal demand buoyed orders for insulation materials based on polymeric MDI and rigid polyols, while demand for TDI and flexible polyols lost momentum toward the end of the month. In August, MDI orders are expected to come off their peaks, due to the summer lull but also to sinking benzene prices. Even with production costs on the rise, slackening demand will keep TDI under pressure. Polyols producers’ lower cost base could strengthen buyers’ chances in the upcoming price talks.

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 July 2011: Secondary market remains resistant despite pressure from virgin material / rPA 6.6 and rPC see reductions / Higher primary cost also impacts production scrap / Situation likely to stabilise despite slack ordering

Between mid-June and mid-July, the market for recycled engineering thermoplastics in German-speaking Europe responded to the initial price cuts in the primary sector with minor price concessions averaging EUR 50/t for rPA 6.6 black and EUR 75/t for rPC black. Notations for rABS, rPA 6, rPOM, rPC/ABS and rPP-Copo compounds, on the other hand, remained largely unchanged. The other notations in the rPA 6.6 (natural/GF) and rPC (natural/GF) portfolios also stayed put at June levels.
Converters were still reeling from the numerous price increases for primary polymers announced in previous months, forcing them to pay top dollar for their production scrap, which necessarily added to the pressure on margins. By now, converters have managed to replenish their inventories, dampening demand for recycled material. Nevertheless, even though regrinding lines were running flat out, output was just barely sufficient to meet the needs of regular customers.  The approaching holiday period gradually slowed down converters' ordering activity, although business in the automotive segment remained lively. Seasonal effects also became increasingly noticeable in the building segment. Although the upcoming holiday months will inevitably affect demand, regrinders hope business will pick up again in the second half of August as buyers look to top up their stocks again. Although primary producers have seen their costs drop quite considerably at times, recyclers do not anticipate any real reduction in purchasing costs, at least in the near future. As a result, most July notations for recyclate are likely to be carried over into August.

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 July 2011: Notations decline by around EUR 40/t / Hard bargainers push some prices below the PIE range / North America and Asia firming / With imports dwindling, Europe could see a rollover in August

In July, European PET producers were forced to grant concessions averaging EUR 40/t as the paraxylene (PX) contract hit an especially deep air pocket. Supply was more than adequate, as domestic production ran uninterruptedly and imports gushed into the market. Against this backdrop, hard-bargaining large converters succeeded in pushing their prices down by around 10% below the PIE range. Demand was not overwhelming during the European summer break, so that sufficient reserves could be built up. As the end-markets, betting that summer would really come to northern and western Europe, sought to stock up on bottle-grade polymer at reasonable prices, most converters who had been holding back had to step up purchasing activity. At press time, the European contracts for PX and MEG feedstock had not yet been settled, but both products were moving sidewards on the spot market or tending higher. As North American and Asian feedstocks were already firming, west European producers vowed to halt the gradual deterioration of domestic polymer prices. With the import influx drying up, they could at least succeed in effecting a rollover in August, even if it is a weak one.

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 July 2011: Ortho resins producers pass through only half their cost advantage / Glass fibre stable despite imports / Summer demand slack / SM price explosion drives calls for hikes in Q3

Price hikes of up to EUR 100/t sought by some resins producers in the first month of Q3 ricocheted off a double barrier of soft summer demand and sinking production costs. In particular as declining notations for the key resins components styrene monomer (SM) and the C3-based monopropylene glycol (MPG) reduced the cost mix by EUR 55/t, the supply side was no longer in a position to resist converters’ calls for polymer price rebates. However, by limiting concessions to not quite half the cost relief, producers were able to improve margins even without pushing through a price increase. Thanks to the summer holiday season, there were few supply bottlenecks. Notations for the glass fibre products covered by this report remained largely unchanged against June. Both chopped strand mats and direct roving were in good supply, due not least to imports. Demand for medium-reactive ortho resins was generally in line with the season. The minimal price relief, however, did nothing to cheer buyers. One player remarked to PIE that the “minor correction” did not compensate for the more than 10% increase in converters’ own production costs in the first half of this year. Moreover, “we were able to increase our own prices by only 2-4%.” The production cost reduction the ortho resins market has been waiting for will not materialise in August. Due to the worldwide tightness of the key aromatic benzene, the SM reference price for August rose by EUR 125/t, or 11%, against July. The EUR 15/t decline in the propylene (C3) price did not even make a dent in the upward surge of the two main feedstocks. Against this backdrop and, provided demand is strong enough, producers could stand to realise some of their initial price targets.

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!

Contract buyers of west European standard thermoplastics generally won only price concessions in line with feedstock declines in July. Producers’ attempts to retain some of the price relief of EUR 95/t for ethylene (C2), EUR 75/t for propylene (C3) and EUR 95/t for styrene monomer (SM) mostly ran afoul of long supply. LDPE and LLDPE dropped the most sharply below the monomer reduction, ceding up to EUR 110/t. HDPE rebates were closer to the monomer slide, enabling producers to hang on to their slim margins. Some even secured a slight improvement for tight injection moulding (prices down EUR 75/t) and blow moulding grades (down EUR 80/t). PP producers had to concede substantially more than the cost reduction, giving up as much as EUR 95/t. Major concessions also were inevitable for plentiful PVC. Despite producers' resistance, prices declined in parallel with feedstocks. PS and EPS prices came down by triple-digit margins. There were few supply issues in the first half of the month, only one or two gaps in LDPE. Renewed increases in the cost of ethylene (C2) and SM led some producers to close order books for LDPE and PS early. Only Ineos Styrenics faced serious problems with its GPPS and HIPS production lines at Wingles / France. Most producers reported livelier demand because many converters had been working off stocks since May and needed to reorder. Medium-sized PE and PP converters leveraged the lower price base to order more substantially. PS buyers reacted rather late to signals from the feedstock side and often came up against closed order books at producers. PVC converters also ordered less, in response to weaker demand from their customers. Signals from the market are heralding that the wave of price reductions is over. Any hopes converters may have of further price cuts will be dashed by renewed cost rises upstream. In Asia, the maintenance season for many feedstock plants is coinciding with a seasonal increase in consumption. The ongoing tightness of benzene in North America has affected European contract agreements. August's ethylene (C2) contract rose by EUR 30/t, while a small decrease of EUR 15/t in propylene (C3) costs was largely accepted as a weak rollover. In contrast, the average EUR 125/t increase in the three August styrene contracts more than compensated for July's cost reduction. PE producers, responding to the general uptick in feedstocks, have announced price rises above the monomer increase. While there is as yet no consensus for PP, PVC producers are determined to hike prices by EUR 30/t. One PS producer has called for rises of EUR 135/t and EPS presumably will follow suit. Despite subdued summer ordering, especially in southern Europe, there is still a considerable risk of price 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!

Composites/GRP March 2011: Feedstocks drive ortho resins up strongly / Further smaller upward price momentum expected / Glass fibres stable / Renewed influx of material from China brings no price relief

The significant price increases registered by key feedstocks styrene and propylene in February had a major impact on March’s ortho resins notations. After a short delay, distributors and converters had to fork out an extra EUR 80/t, and even buyers of large volumes were unable to escape significant rises. Favourable spot market volumes were rare in February, but in March material did become available at the upper end of the price range.

Although the spiralling cost of styrene eased somewhat and rose by only EUR 29/t in March, propylene (the feedstock for monopropylene glycol) climbed by EUR 80/t. At the end of the month, the situation was exacerbated by the announcement of force majeure for maleic anhydride from Moers / Germany. On its own, that is probably not a key factor, but in combination with the other developments it could have a significant impact. It is still unclear when the Sasol-Huntsman facility will return to normal operation. Some sources expect a start-up in mid-April, which would bring into play the new capacities installed at the site, now capable of producing 105,000 t/y. It still remains unclear if this outage could result in a bottleneck affecting resin prices. So far, Sasol-Huntsman has not provided any more details in response to PIE’s queries.

April’s styrene contracts are down by an average of EUR 88/t, and the minor EUR 25/t rise in the price of propylene can do little to change that. However, it will take time for this reduction to reach converters. As a result, a further slight upward movement can be expected in the short term, although it remains difficult to tell how high prices will move. It is therefore hardly surprising that significant price increases have not yet been factored into the finished products – and certainly not in their entirety. It is clear that customers will have to dig a little deeper into their pockets fairly soon. There have been occasional reports of supply problems with additives and pigments such titanium oxide.

With glass fibres, neither rovings nor chopped strand mats moved much, a normal situation given that contracts tend to be negotiated for six months or even a year. The price of material now beginning to arrive again from China after the EU’s imposition of anti-dumping measures is moving in an acceptable range somewhere below that of the favourable European competition.

Although the focus at this year’s JEC Composites Show (held in Paris / France from 29-31 March; www.jeccomposites.com) was on automotive and carbon fibres, it was evident that the fair organisers had problems orientating themselves in the new market reality and in defining its direction for the coming months. Although no one specifically pointed to the effects of the earthquake in Japan and the fact that the country’s economy will be practically paralysed for many months, it quickly became clear that the industry now finds itself in a wait-and-see modus. Nonetheless, the numbers of visitors and exhibitors at the show far exceeded those of the previous year.

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 July 2011: Prices stable at a high level / ABS, PC and PP respond to the lower cost basis / Supply adequate / Holiday period dampens demand / Stability likely

European engineering thermoplastics prices were largely stable in July, albeit at a high level. Only certain ABS, PC and PP compound grades responded to the lower costs with minor price reductions. Demand declined amid the holiday period, which meant the effect of lost output – caused by unscheduled outages at feedstock plants and polymerisation lines – was not as great as it would normally have been. Orders from the automotive segment were quite robust, although business in the other sectors slowed down as the holiday season drew nearer. Any expectations of prices dropping in the second half of the year were quashed by the significant increase in August’s contract price for key aromatic benzene. Related feedstocks, including caprolactam, phenol and styrene, also rose again. Nevertheless, by press time, no moves had been made to hike prices, apart from the calls to hike PBT, which date back to the beginning of Q3. As a result, the cover afforded by the holiday period means August notations could remain unchanged at July’s level.

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!

 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!