Overview
The prompt settlement of the C2 (Ethylene) and C3 (Propylene) on January 3rd was, for many, a bit of a shock. Whilst the United Kingdom enjoyed an extra public holiday due to New Year’s Day falling on the weekend, most of Western Europe had already returned to work on Monday. The scale of the feedstock price reductions was greater than expected, however the fall in Brent Crude was at a similar level.
As polypropylene and polyethylene sales started to get underway, it quickly became clear that polymer producers are working hard not to pass through the full reduction in monomer pricing. Poor margins were cited as a reason for this alongside the continuing high cost of energy required to produce polymers.
Sales in January tend to be protracted, with converters typically buying on an as need basis until a degree of normality returns from February. Sellers may have a better opportunity to ‘tune’ prices through the month to achieve a satisfactory price/volume balance. Concerns about underlying demand persist throughout the supply chain and this creates a dovish sentiment amongst may sellers.
In the case of aromatic feedstocks, it appears that a reduced level of benzene imports into Western Europe during December is pushing pricing upward as buyers chase available volumes. The increase in benzene has mainly passed through into Styrene Monomer. As a consequence, styrenic polymer producers will be pushing increases of a similar scale.
Producers of engineering polymers will also give thought to how it may be possible to recover this inflationary factor in a market where demand remains lacklustre.
Monomer Price Movement
Feedstock
Change (Contract)
C2 (Ethylene)
-£82.65
C3 (Propylene)
-£82.65
SM (Styrene Monomer)
£100.05
Benzene
£126.15
Brent Crude
-£78.63
Exchange Rate
1.15
Mike Boswell
Managing Director – Plastribution Group
Oil Prices
No Data Found
Exchange Rates
No Data Found
UK Economic Data
Topic
Item
Date
Change
Trend
GDP
Real GDP (Q on Q)
Q2 2022
£556,856
UK Output
Manufacturing Index
Q3 2022
103.6%
Sales
New Car Registrations (Y on Y)
October
18.3%
Sales
Retail Sales (Y on Y)
October
114.7%
Labour
Unemployment Rate
July – September
3.7%
Prices
CPI (Y on Y)
October
10.7%
Prices
RPI (Y on Y)
October
14.0%
Interest Rates
Bank of England Base Rate
November
3.50%
Polyolefins
January saw falls almost in line with the monomer drop of €95 / MT for both C3 Propylene and C2 Ethylene. Some Producers limited reductions to €50 / MT citing continued high energy costs and some sought compromises around €70 / MT. Market is still quite muted with many buyers having sufficient stocks and have no challenges in securing material.
Outlook for February is for relative stability. Expectations on monomers are mixed with some expecting an increase on the back of higher Naphtha prices but others see oversupply, especially on Propylene C3, that indicates small decreases. With no restrictions on polymer availability and with demand low on the back of general economic concerns, there is little chance of prices moving back up.
Some industry talk of further attempts to limit production in Europe as producers selling at levels to compete with imports of HDPE etc. are in very negative margin territory. The outlook for the coming months is also dependent on how much China demands when they return from Lunar New Year celebrations.
Ian Chisnall
Product Manager – Polyolefins
Polyolefins Feedstocks
£/Metric Tonne by month
No Data Found
LDPE
Supply
Demand
LDPE pricing is typically around £60-80 / MT down from December in line with monomer. Market is quiet and availability Is good. Spot deals for volume are widely discussed.
LLDPE
Supply
Demand
C4 LLDPE fell roughly in line with monomer and like LDPE was roughly £60-80 / MT down on December pricing depending on starting point and currency rates. Exports from USA are not as cheap as they were in December following some interruption to supply after the recent storms.
The effects are likely to be seen in the coming months with fewer spot deals available.
HDPE
Supply
Demand
HDPE also fell by approx. £60-80 / MT in line with monomer. As with LLDPE, imports from USA are slightly affected by the recent freeze but this is relatively minor and prices are not expected to rebound any time soon.
PP
Supply
Demand
PP pricing fell in line with monomer into January and typically saw around £60-80 / MT reductions.
Demand for PP continues to be relatively weak, with key market sectors affected by the gloomy economic outlook. Material is readily available, and buyers are looking for deals.
Other Polyolefins
EVA pricing dropped £70 / MT but with a mixed picture as Total continue to have no availability and the market situation is balanced to tight when compared to standard Polyolefins. Speciality POP grades were also down with monomer.
Styrenics Feedstocks
£/Metric Tonne by month
No Data Found
PS
Supply
Demand
December saw PS hit the bottom of the curve, with a SM fall of €-132/T. Supply was low, as several EU SM plants were closed, and PS production was cut or running at reduced outputs. Demand was also poor, due to Christmas shutdowns, and converters reducing inventories.
January points towards a trend of rising prices, Styrene has risen by €115/T, and PS producers are generally applying this as a minimum. Supply and Demand remain balanced, with some production increases, and converters starting to restock after the break.
ABS
Supply
Demand
December delivered another price drop of €80/T due to falling composite costs (SM -€132/t, butadiene -€140/t, ACN -€88.5/t). EU ABS production cuts remained, but imported grades took up the slack. Demand was low due to year end.
January prices rolled over as raw material costs showed a slight increase, possibly indicating the start of an upwards price trend. looks very similar, with prices expected to continue the downwards trend. It is expected demand will improve as converters begin to restock. EU grades remain short, and imports are covering any shortfall.
PC/ABS
Supply
Demand
As usual, PC/ABS price is following the trend of ABS.
Other Styrenics
SAN and specialities such as ASA and SMMA continue to follow the price trend of ABS.
Engineering Polymers
Sharron Jarvis
Product Supervisor – Engineering Polymers
Engineering Polymer Feedstocks
£/Metric Tonne by month
No Data Found
PA6
Supply
Demand
With weak demand and cheaper imports arriving it is inevitable that prices are falling. European plants continue to cut back on production to try to balance the market however there is sufficient material to cover contracts.
PA66
Supply
Demand
A similar picture to PA6 with significant decreases in prices and reduced production in Europe.
POM
Supply
Demand
Demand from the automotive and building sectors last month were extremely low, putting further downward pressure on pricing as we start the new year.
.
PC
Supply
Demand
The market remains quiet as we enter the new year, which is putting further downward pressure on pricing.
European production plants are reduced and only running at around 65% of capacity. Customers are only buying what is required so supply remains adequate to fulfil immediate order books.
PMMA
Supply
Demand
It is anticipated that we may see a slight improvement in the automotive sector in January as moulders only purchased what was necessary before Christmas.
Imports from Asia will continue to put pressure on pricing yielding at best a rollover situation for January.
PBT
Supply
Demand
Higher import volumes in January could put pressure on prices and many moulders are only ordering in smaller lots whilst waiting to see what the market does.
Other Engineering Polymers
The situation for other engineering grades remains complex, most materials are starting to soften in price, and we are seeing greater availability from imports.
