Price Report Abstracts September 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 September 2011: Prices soften on a broad front / Polyolefins tend downwards / PVC in weak rollover / PS and EPS producers pass on feedstock relief / Output cuts to avoid surpluses

By the end of the third quarter it was clear that the price hype forecast by producers for standard thermoplastics in early summer would not take place. Quite the opposite – it turned out to be a buyers’ market. In September, most western European buyers were able to win at least minor concessions.

The ethylene contract for September was down only minimally – by EUR 5/t compared with August – while propylene slipped by EUR 37/t. Of the polyolefins, LDPE and HDPE registered price falls of up to EUR 20/t over the month, while LLDPE barely moved except for a small dip in the higher-grade materials (C6/C8). PP producers were mostly forced to pass on their reduced costs for injection moulding material, but managed to improve their margins, if only slightly, for film grades despite concessions of EUR 25/t. Prices for the once tight EVA products came back down to earth with a significant reduction of EUR 105/t. Despite the ample supply, PVC ended the month down only EUR 5/t.

After a sharp leap in August, the styrene monomer (SM) contract reference price retreated again in September, by EUR 39/t. Among styrenics, only EPS producers could pocket some of the cost relief to improve margins, as prices softened by just EUR 25/t. Sellers of the more plentiful PS had to pass on the full cost reduction of EUR 40/t.

To bolster prices, back-integrated polymer producers resorted to ever more drastic measures. Output of many feedstock plants was reduced and downstream operations adapted accordingly. Alongside the various scheduled maintenance turnarounds for PE, PP and PS polymerisation lines, September was also hit by a number of unplanned force majeures for PE, PP and PVC. Despite all this, suppliers were generally able to meet the weaker demand without problem, which of course left them sitting on material.

Business in the final month of Q3 on the whole was much weaker than producers had expected. On the one hand, the unexpected flatness of the cost curve despite last spring’s dire predictions led to a certain amount of passiveness, and at the same time consumer demand shrank as news of the European debt crisis grew increasingly negative. The resulting order slump kicked back up the chain relatively quickly.

Most producers have told PIE that they do not expect the economic situation to improve much in Q4. Many key players are therefore contemplating such stringent measures as closing refineries, which will have knock-on effects through the chain down to petrochemicals and polymers. The initial effects can be seen in October's olefin contracts. In response to the tighter supply, C2 was stuck in a rollover, and C3 fell back only slightly, by EUR 10/t. By contrast, the triple-digit decline in the benzene contract sent SM reeling. The three reference contracts agreed for October showed decreases averaging just over EUR 80/t.

Producers seem so convinced that their measures to get the market under control will work that they have boldly proclaimed increases ranging up to EUR 150/t for PE. Despite lower costs, PP producers also have told PIE they will raise prices soon – without naming a figure. PVC suppliers are taking a more modest approach, asking for a rise of only EUR 30/t. PS producers intend to pass on at most EUR 45/t of their cost reduction averaging EUR 80/t. For now, at least, the predominantly still healthy supply situation will continue to govern price movements.

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!

Standard Recyclate September 2011: Notations mostly roll over / Gains for opaque rPE and rPS / Occasional concessions for rPE and rPP / Base material tight / Building market may continue to drive

After a weak rollover from mid-July to mid-August, when summer holidays and financial turbulence created uncertainty among the mostly medium-sized suppliers, standard recyclate markets appeared headed for a strong rollover in mid-September. Unclear movements in the primary polymer segment initially left secondary sellers without direction, but the management crisis at the European Central Bank in the second week of September led notations to firm again. The upswing in primary prices was too weak to benefit natural or translucent rLDPE film, which in some segments competes directly with virgin material, but a rollover was never in doubt. Stronger demand helped to push the less transparent (light- and dark-coloured) grades forward by as much as EUR 10/t.

By contrast, rPE extrusion and injection moulding material declined by EUR 20/t. The still lively building season supported the rollover of rHDPE and pipe grade gained EUR 15/t. Recycled PP copo was swept into the downward spiral seen earlier for homopolymer. Although demand for base material was strong, supply remained tight, so that PS recyclers for the most part saw increases of only about EUR 10/t.

Many recyclers shut down for maintenance in summer. When business in German-speaking Europe geared up again in the middle of the third quarter, demand for rPE and rPP – especially from harvest, building and landscape gardening applications – recovered strongly. The refilling effect tightened supplies of base material somewhat, but most deliveries could be made on time.

The brisk ordering for packaging and industrial applications boosted sales of rHIPS. As the earlier somewhat oversupplied market moved back into balance and the weakening euro improved export opportunities for producers in that sector, recyclers’ chances to recoup some of the margin losses incurred over the past year started looking better. But they were nevertheless unable to pass on the still firm procurement prices in full and were estimated to be about EUR 30 short on every tonne sold. Even if price hikes across the board appear unlikely, increases could be seen here and there in the current trading period, especially if demand remains strong.

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 September 2011: Oversupply hits TDI / Producers retain part of cost advantage for MDI and polyols / Supply lengthens as demand recedes / Margin improvement through price hikes?

After soaring in summer, production costs for the key base chemicals were losing ground as the third quarter ended. On the back of the decline, notations for polyurethanes’ immediate feedstocks also came down, although from the buyers’ perspective the EUR 10/t decrease for polymeric MDI was disappointingly small. The key aromatic benzene cost EUR 67/t, or 8%, less than a month earlier. Pure MDI prices saw stronger downward momentum, dropping by EUR 30/t. The premium of pure over polymeric narrowed by a quarter to EUR 60/t. TDI, slipping back by EUR 65/t, lost the most ground. Flexible polyols, reacting to the price slide for propylene (C3) and styrene (SM) gave up EUR 35/t.

Supported by numerous quarterly contracts, notations for rigid grades continued to run in place. In September, supply bottlenecks also began to ease as maintenance turnarounds were completed. The start-up of the expanded MDI and TDI capacities at Hungary’s BorsodChem also was beginning to make an impact on the market. As the expected post-vacation surge in demand did not materialise, there were no delivery delays.

As usual, the building industry was a major market driver for polymeric MDI and rigid polyols, while the automotive sector propelled TDI and flexible polyols. Demand from the furniture sector continued disappointing. Headed into the fourth quarter, spot notations for polyurethane manufacturers’ base chemicals indicate sinking input costs; however, as producers are still reeling from the staggering increases in summer and need to improve margins, this could make it tough for buyers of MDI and polyols in the year’s final quarter. The persistent oversupply of TDI by contrast could lend a tailwind to the already sinking price trend.

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 September 2011: Virgin material's instability hits rPA, rPOM and rPC / Plastic scrap still tight and expensive / Demand for inexpensive recyclate remains strong / Suppliers intend to take hard line

A healthy bout of ordering by companies returning from their summer break and intent on replenishing their stocks breathed life back into the engineering recyclate market in September. However, the price battles waged in the primary sector failed to bring medium-sized recyclers any significant cost relief in their purchases of plastic waste. Converters’ high rate of captive use continued to keep the supply of production scrap tight, which inevitably stabilised prices. The problem was exacerbated by the fact that the market became inundated with imports of virgin material. As a result, rPOM, rPC and some rPA grades suffered a drop of up to EUR 50/t in the already tightly calculated margins. In the case of rABS, rPC/ABS and rPP-C as well as other grades of recycled PA, suppliers were nevertheless able to hang on to a rollover.

Since many regrinding lines were not working at full capacity amid the holidays, availability of plastic waste improved slightly. This situation proved short-lived, however, as an influx of post-vacation orders to replenish stocks almost entirely swallowed up production. As a result, even regular customers had to wait a while for their deliveries.

Most recyclate suppliers described demand was normal, with those more closely affiliated with the automotive segment even saying it was good.

With demand flattening out slowly but surely, pressure on primary sector notations is rising. Nevertheless, only a few regrinders believe this will have any immediate effect on their purchases of plastic waste. Given the extreme shortage of production scrap evident during the last two high-price quarters, few are confident about any sort of improvement. With costs still extremely high, recyclers are not only feeling threatened by ultra-thin margins but increasingly rampant imports, too. In the final quarter of the year, most players are determined to fight hard to defend a rollover.

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 September 2011: Feedstocks higher, driven by China / European price hikes at the lower end of the global upswing / Imports continue to decline / Demand for film crumbles / Forward development is unclear

Rising feedstock costs pushed polymer prices higher again in September, whereby the European market’s upward momentum with average hikes of EUR 10-40/t lagged behind that of other regions, including North America. Asia saw triple-digit increases. For large accounts in all regions, however, the worldwide price trend continued to converge.

Asian imports were again rare as the price surge there showed no signs of ending, and the Euro was weaker. Demand for bottle polymer held steady in line with the season, but orders for film began to soften in the wake of the growing economic uncertainty, which is clouding the outlook going into October. It is not yet clear which direction feedstock prices will move, although spot notations in Europe and especially China have begun to point downward. Any attempts by polymer producers to push through price increases in October appear doomed to fail.

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 September 2011: Initial weaknesses appear / ABS, PC, PA and PP compounds begin to crumble / So far the overall picture still remains one of stability / Benzene and butadiene at last decline

European engineering thermoplastics prices remained predominantly stable at a high level in September 2011, but because the normal post-holiday top-up effect largely failed to materialise, the much weaker ordering activity left its mark on polymer notations. In competition with cheaper imports, ABS even had to shed as much as EUR 70/t. Thanks to small downward corrections of up to EUR 40/t, any excessive price peaks that came about during the long phase of upward momentum for transparent PC, glass-reinforced PA 6 and natural PA 6 grades were brought into line again. Trailing indexed orders, which are tied to the price of the monomer, notations for PP compounds also fell by up to EUR 30/t. Despite the EUR 67/t decline in the cost of key aromatic benzene, most engineering thermoplastic prices remained unchanged at August’s levels.

The by now rather moderate demand allowed producers to put their inventories in order again. As a result, delivery times returned to normal, at least with the standard grades. Buyers of more specialised grades still had to wait a lot longer for their deliveries.

Producers across the board were disappointed with demand. Instead of the usual post-holiday scramble to replenish stocks, converters worked from the inventories they had amassed when material was tight in the spring. The only ray of light came from the automotive segment, where business continues to be strong and dynamic. At the beginning of Q4, producers were still reluctant to call for price increases, although there was some mention in Q3 of upcoming price thrusts for PA, PBT and POM. In the knowledge that – amid the latest significant decrease in the benzene contract (down 15%) and an equally pronounced decline for butadiene (down 13%) – the cost structure is wobbling, producers will at the very least insist on notations being carried over again in Q4.

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 September 2011: Resin demand recovers only slightly after summer lull / Converters ordering cautiously / Sombre mood at “Composites Europe” fair / Glass fibre roving range widens minimally

In August, most composites market players thought business would pick up after the summer holidays, but by the time the “Composites Europe” (www.composites-europe.com) exhibition was held in Stuttgart / Germany at the end of September, the mood had changed. Neither producers nor converters thought a significant revival would be seen this year. Reflecting that sentiment, notations for the ortho resins covered in this report gave way slightly against August. Glass fibre, however, remained stable for the most part. The range for direct roving widened in both directions, although movements were too slight to influence the PIE table. In October, the lower contract price for styrene monomer (SM) and to a lesser extent also for propylene (C3) could open the door to sinking prices.

The fall of EUR 39/t in the SM contract and EUR 37/t in the propylene contract for September were the signal for last month’s ortho resins downswing. Notations for the other composites starting materials, phthalic acid anhydride and maleic acid anhydride, which are fixed quarterly, were carried forward. Parallel to the weakness in petrochemicals, demand for composites failed to revive to the expected extent at summer’s end, although demand was buoyant in the wind energy (especially Brazil) and automobile/truck sectors.

Negative impulses emanated, for example, from the French passenger car segment. Even if business remained generally good, the warning of further job losses by the automotive suppliers association FIEV (Suresnes; www.fiev.fr) increased uncertainty in the industry. The statement that “at best, employment levels would remain stable” contrasted with the suppliers’ sales increase of nearly 10% in the first half of 2011 and forecasts that full-year revenue would exceed the 2010 figure of EUR 17.9 bn. At the end of 2010, the industry employed 88,000 people. So far, no negative rumblings have been heard from the German automotive sector, where exports continue to bolster business.

Problems also dog the building industry of southern Europe, particularly in Spain. This year’s performance has been below par so far, and winter is just around the corner. The boating sector, too, has still not returned to its pre-crisis level – even if the world’s largest manufacturer of recreational watercraft, Bénéteau (Saint Gilles Croix de Vie / France; www.beneteau-group.com ) reported 21% higher sales in financial year 2010/2011 (31 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!