Price Report Abstracts October 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 October 2011: PE, PP and PVC down despite stable costs / PS in triple-digit fall / EPS margins improve / Production cuts with limited impact / Targeted hikes have little chance of success

Despite some early attempts to push through astronomical increases of up to EUR 150/t – for PE, for instance –western Europe’s producers of standard thermoplastics were forced to grant price concessions for just about all products in October. With olefin prices either stagnating or falling slightly – ethylene (C2) rolled over, propylene (C3) was down EUR 10/t – most producers aimed for at least a rollover for polyolefins and PVC. However, softening demand and increasing imports soon improved the buyers' hand. In the second half of the month, some producers began clearing inventories, and as spot fell correspondingly, contract notations went down as well. By month’s end, polyolefins had slipped by as much as EUR 45/t, although most – parallel to PVC – shed around EUR 35/t. HDPE, where margins are still especially low, fared best, dropping only around EUR 10-15/t.

Although sellers of styrenics may have initially welcomed the EUR 80/t fall in the SM contract reference price in October and vaguely hoped to pacify customers with rebates of just over half the cost reduction, they were disappointed. It did not take long for buyers to haul the price cuts down into the triple-digit range. With high-impact, butadiene-modified grades falling EUR 30/t more than GPPS, the spread narrowed again. As ordering by insulation materials producers moved back into high gear, EPS pricing gained considerable momentum. Indeed, producers were able to pocket around half the cost reduction to improve their margins.

On the supply side, a number of defences collapsed in the 43rd calendar week, following the “Fakuma” trade fair. Polyolefin producers, apparently feeling the pressure, began clearing out inventories much earlier than usual. Parallel to this, production of both olefins and polyolefins began to be reduced, which did not make much of a difference in view of the already sluggish demand. Except for EPS, where demand is booming, producers were usually able to fill customers' requirements quickly.

With EPS a major exception, orders for standard thermoplastics generally remained below producers' expectations. Even the many low-priced special offers in the market could not always attract buyers.

In November, producers' costs retreated once again. C2 is down EUR 20/t, C3 down EUR 55/t, and SM down a further EUR 24/t. Irrespective of this, producers are calling for hikes of EUR 100/t for all PE materials in November. Some are even targeting double that figure, but are willing to wait until January. The cutbacks already in place are designed to reinforce this effort. No PP producers had come forward with planned hikes at press time, but they are sure to target a rollover. Some PVC producers have already stated that this is their goal. PS sellers will also try to hang on to a rollover if possible with all the "special offers" in the market. EPS is the only polymer with good prospects of securing a strong rollover, but all other thermoplastics are currently pointing downward.

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Standard Recyclate October 2011: Primary market corrections have little impact / rLLDPE mostly flat / rPP and rPS shaky / Input material tight and expensive / Stability likely despite waning building season

Notations for standard recyclate in German-speaking Europe held up fairly well from mid-September to mid-October as the financial turbulence that had rocked the upstream petrochemicals markets subsided – at least temporarily. Producers adapting to the changed business parameters stabilised the primary market and offered buyers of secondary material less volatility. Apart from a few minor downward corrections at the upper end of the scale, recyclate prices, which hover several notches below virgin material, mostly rolled over. Notations for rPP and rHIPS declined moderately in reaction to concessions by primary producers.

Demand remained buoyant, allowing recyclers to run their plants flat out. Most delivery bottlenecks were dissolved, so that regular buyers could be supplied on time. As prices for virgin PS were still fairly high despite declines, converters' interest in recycled materials held up.

Primary producers are resorting to capacity cuts to reduce oversupply of some polymers and stabilise notations. If petrochemical prices rise, polymers could follow. Nevertheless, recyclers are unperturbed. Several players pointed out to PIE that if costs go up, primary producers will raise their own prices at the end of the year. From today’s perspective a rollover for recyclate seems assured.

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 October 2011: Disciplined producers retain some cost relief to pad margins / Same strategy is planned for November / Demand improves as Q4 gets under way

Despite the nearly triple-digit plunge in notations for key aromatics benzene and toluene and styrene monomer (SM) respectively, producers of polyurethane feedstocks passed on only part of their cost advantage to their customers at the beginning of the fourth quarter. Producers of polymeric and pure MDI conceded EUR 35/t, while TDI producers allowed rebates of only EUR 25/t. Polyols producers were willing to pass on only as much as EUR 35/t. Thus it would be safe to say that producers’ margins improved over the past month.

Supply of MDI was somewhat slacker, due to ongoing maintenance turnarounds, but was sufficient to assure prompt deliveries. Polyols also were in adequate supply, although strong demand from the building sector led to occasional delays for rigid grades. By contrast, there were no supply bottlenecks for standard TDI grades.

Orders for polymeric MDI and rigid polyols for building insulation held up particularly well, but demand for all other PU starting materials picked up significantly against September.

As producers will be bent on further improving margins in the fourth quarter, against a background of declining costs they can be expected to exercise iron price discipline and at the same time peg supply closely to demand. This means that notations are likely to move sideward. If offered at all, rebates will be held to a low double-digit margin.

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 October 2011: End to the primary market's Q3 price cap causes recyclate notations to crumble / Double-digit falls abound / rPP compounds stable / Availability of plastic scrap improves / Declining orders / Stability possible

The dynamics of the engineering recyclate market in German-speaking Europe calmed considerably in October. After an end to the primary market’s high-price protection phase, a few tussles erupted over prices, which later influenced regrind notations, too. Nevertheless, recyclers still had to pay top dollar for their plastic scrap. Forced to make price concessions averaging EUR 50/t for most recycled products (except rPP compounds), their margins took another beating. Natural rPA 6 even saw its price slashed by triple digits.

On the supply side, most segments have seen demand decline somewhat amid the uncertain economic prospects.

Availability of plastic scrap may have improved in terms of quantity but not in terms of price. Most orders for standard recycled engineering grades were delivered fairly promptly.

Falling feedstock costs increased the pressure on the primary sector. With the end of the high-price protection phase of Q3 and in anticipation of falling prices, converters reduced their orders to a minimum. Adopting similar tactics, the pressure also mounted on recycled compounds.

By adopting such a stringent purchasing policy, converters are hoping to see some of the primary producers' cost relief trickle down to them, too. In principle, they could attempt to switch to recyclate, although most do not appear to harbour such thoughts.

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 October 2011: Small increases in Europe reflect higher production costs / Asian softness pressures spot market / Producers' stockpiles widened / Cautious ordering / Falling notations on the horizon

PET contract prices in Europe moved slightly upward again in October on the back of higher costs for feedstocks PX and MEG, thus stepping out of line with the tune to which the other world regions were dancing. Over the course of the month, however, cheaper imports from the sharply deteriorating Asian market began pushing European spot prices downward. Merchant buyers in the Mediterranean region speculated on falling notations and held back orders, thus steepening the downward spiral.

Inventories at European PET producers were full to overflowing, due to the increasingly soft demand across the continent and in the rest of the world. As Asian markets continue moving downward, they are likely to take European and North American prices with them in October. The extent of the downswing will be determined by the development of PX and MEG 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!

Engineering Thermoplastics in October 2011: Situation at last begins to ease / ABS, PC and PA take a dive as costs of benzene and butadiene plummet / Trend till year-end is "down, but under control"

European engineering thermoplastics prices at last began their long-awaited descent in October on the back of a marked relaxation in benzene and butadiene notations. ABS fell by up to EUR 100/t, while PC and the polyamides receded by around EUR 50/t. By contrast, PBT, POM and PMMA – which tend to be tied to long-term agreements – remained relatively stable, although even here prices started to crumble in the lower regions of the freely negotiated range. PP compounds escaped relatively unharmed amid the protection of indexed contracts, as C3 fell by only EUR 10/t in October.

Overall, availability has improved quite considerably thanks to a number of factors, including weaker demand, increased imports (mainly from Asia), and the fact that many plants have resumed normal production. Demand has dropped noticeably, and all eyes are now fixed on ensuring that not too much capital is tied up in stocks when the accountants draw up the balance sheets at the end of the year.

The cost of key feedstocks and intermediates in the aromatics and butadiene chain is continuing to decline. Coupled with the considerable drop in demand, engineering thermoplastic prices will likely continue to fall, at least in the distribution segment and on the open market. Under these circumstances, it will be very interesting to see how the upcoming negotiations for long-term direct orders for Q1 2012 actually pan out.

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 October 2011: Downward trend in resins prices continues / Signs of slightly softening demand / Buyers of resins and glass fibre will be looking for additional rebates in November

Composites industry players hoping for a revival of the trading economy following the end of the summer holidays and the “Composites Europe” exhibition in Stuttgart / Germany in late September were disappointed. After weakness in the final month of Q3, the downward trend continued in October. If it was any consolation to resins producers, most starting materials prices also lost momentum.

The contract reference price for leading feedstock styrene monomer (SM) gave up EUR 80/t in October against September, while propylene declined by a rather modest EUR 10/t. Fourth-quarter prices for maleic acid anhydride were stuck at the third-quarter level. Phthalic acid anhydride was the only raw material to move upward, by EUR 28/t. The cheaper feedstock cost mix nudged prices for the medium-reactive ortho resins covered in this report downward by EUR 15/t. Glass-fibre notations were more or less unchanged, but the market is expected to see initial first signs of a slight deterioration as the year ends.
Fuelled by the automotive industry and large compounders, demand held up well in October. Buyers in plant construction, flanked by pipe linings and tanks as well as wind energy applications – especially in the European market – also ordered well. While there were some indications of a slight softening of demand, this did not substantially affect pricing or delivery times for ortho resins.

The outlook for the medium term is more cautious, as job cutting plans announced by French auto makers Renault and PSA suggest. Figures published recently by the European Automobile Manufacturers Association (ACEA, Brussels / Belgium; www.acea.be) put the trend into perspective. In September, demand for new passenger cars increased by only 0.6% throughout the European Union (EU), with almost all of the modest improvement attributable to the German market, which saw growth of 8.1% year-on-year. By contrast, growth in the UK was down 0.8%, in Spain by 1.3%, in France by 1.4%. Italian demand was down more substantially, by 5.7%.

Efforts by China to strengthen its wind energy imprint outside emerging markets shake up composites markets. The state-owned China Development Bank recently provided wind turbine manufacturer Ming Yang Wind Power (Zhongshan, Guangdong Province; http://www.mywind.com.cn/EN) with EUR 5 bn of fresh capital to drive its international expansion forward and gain a berth in the offshore segment. Up to now, the Chinese company listed on the New York Stock Exchange has been active primarily in South America and Africa and to a lesser extent in eastern Europe, the US and Oceania.

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!