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Polymer demand slow as sharp price fall anticipated

By: David Platt, Plastics News Europe

11 December 2018

Demand was mostly subdued last month and with expectations of a sharp price fall in December, converters ordered just enough material to cover their immediate production needs.
December outlook
December is likely to see more significant price cuts following triple-digit falls in the ethylene, propylene and styrene monomer contract prices.
L/LDPE
Initial L/LDPE offers for November emerged with mostly rollovers to modest price hikes following a reduction of €10/tonne in the ethylene contract price settlement. However, as a result of buyer resistance and ample supplies sellers reluctantly accepted that small discounts were inevitable.
LDPE prices fell in line with the ethylene cost reduction while LLDPE prices were down by €15/tonne. Buyers were simply unwilling to pay even modest hikes ahead of the year-end, when most sellers deplete their stocks.
Supply was somewhat tighter than in previous months although material availability was still affected by the restrictions in Germany's Ruhr region and the outage at Sabic’s PE plant in Gelsenkirchen, Germany due to an inability to obtain feedstock.
Demand was slow in November as converters started to run down stock levels as the end of year approached. 
HDPE
Most HDPE producers initially went to the market in November with plans to either raise prices by a modest amount or for a price rollover. By and large, most buyers adopted a wait-and-see approach with an expectation that sellers would have to lower offers by end month. Sure enough, HDPE prices edged lower, blow moulding prices fell €15/tonne, injection moulding fell €10/tonne and blown film prices were down €5/tonne.
Material availability was still affected by the restrictions in Germany's Ruhr region and the outage at Sabic’s PE plant in Gelsenkirchen, Germany due to an inability to obtain feedstock.
Demand was subdued and most converters started to run down their stock levels as end of year approached.
In December, HDPE prices are expected to see a substantial fall after the ethylene contract price plunged by €110/tonne.

PP
At the beginning of November, PP sellers planned to raise prices for all grades despite a reduction of €10/tonne for the propylene contract price. In most cases they were unsuccessful in the face of low demand.
Blown film and copolymer injection grades saw price rollovers, while homopolymer injection prices fell in line with the cost of monomer.
There were supply limitations for PP during November as a result of unplanned plant outages in Germany, Belgium and the UK, and continued restrictions on shipping due to low water levels in the Rhine River.
For December, polypropylene prices are likely to register substantial discounts after the propylene contract price was settled €100/tonne lower. However, as supply is unlikely to lengthen and demand will be curtailed by the holiday season, the magnitude of any price reduction is uncertain.
PS
Polystyrene prices fell sharply during November after the styrene monomer (SM) reference price plummeted by €170/tonne, although sellers managed to retain a share of the cost reduction. General-purpose PS material prices fell by €135/tonne while high-impact PS fell €120/tonne.
The continued shipping restrictions along the River Rhine meant that certain suppliers were still only able to deliver to a very limited extent. Furthermore, there were further supply restraints later in the month due to strikes in France and Belgium affecting procurement from some production facilities in those countries. However, overall there was sufficient materials available on the market to meet demand.
Buyers only bought what was necessary and adopted a wait-and-see approach, speculating on a further substantial price reduction in December.
Polystyrene prices will indeed fall further in December after the SM reference price plunged €150/tonne.
PVC
PVC base resin prices were either fixed at a rollover or fell €5/tonne, in line with the proportionate reduction in ethylene costs. Unplasticised rigid PVC compound prices slipped by €5/tonne due to lower titanium dioxide prices. Plasticised flexible PVC compound prices increased €30/tonne due to a plasticiser shortage.
Production levels returned to more normal levels during November but producers’ stocks remained low. French producer Kem One lifted the force majeure for PVC produced at its plant in Berre and production is back to normal at Anwil’s plant in Poland.
There are still restrictions at some production plants in Germany, especially along the River Rhine and Vestolit has declared force majeure on caustic soda and PVC supply from Marl, Germany
Pipe and profile demand from the construction sector and flexible cable demand was reported as good.
PET
The PET price bubble which began during the summer is over. In November, bottle-grade PET prices fell for the second consecutive month due to lower costs, weaker demand and higher Asian imports. The November paraxylene contract price fell €77.5/tonne as a result of weaker notations in Asia, a reduction in the price of crude oil and demand slowdown. In response, European PET prices fell within the range €70-80/tonne.
There was sufficient material available despite plant maintenance in Spain and Lithuania and force majeure being called at the Indorama plant in Rotterdam. Higher volumes of low-priced Asian imports flowed into Europe to swell supply.
November is an off-season for beverage bottle production and consequently PET demand was low.
PET prices are likely to fall further this month as a result of falling upstream costs and low demand.