As polymer producers continue to try to push through inflationary cost increases, the supply/demand balance for polymers continues to create resistance. There are also concerns that downstream demand will remain weak.
The inflationary pressures that polymer producers face continue to increase, particularly as crude oil price increases cause hikes in monomer prices. Crude oil cost increases are exasperated by recent strength in the USD, which has gained about 2.5% in value against both the GBP and the Euro in recent weeks. USD strength will also impact on the price of polymers which are USD denominated, including engineering polymers and high performance styrenic polymers such as ABS. this effect will also likely be felt in HDPE and LLDPE markets, where US origin material is taking an increasing share of UK and European consumption.
Despite some more positive trends in terms of the UK macro-economic data, converters remain downbeat, citing plentiful supply and supressed downstream demand as justification for a dislocation between feedstock and exchange rate inflation and polymer pricing. Additionally, converters appear to be quite well stocked and on this basis are adopting a ‘wait and see’ purchasing strategy, in hopes of the situation out until low seasonal demand at the end of the year causes polymer suppliers to concentrate on moving volume through the supply chain.
Current expectations are that price increases will be applied in November across PE and PP grades, with then a review at the end of the month before determining price action in November. Unless there is a substantial improvement in demand then there is already expectation of a soft rollover.
In the case of polystyrene, the volatility of Benzene and SM continue to be reflected in prices and triple digit increases are widely being applied in October.
Whilst demand remains weak for most engineering polymers, there is growing consensus that prices have at least reached the bottom.
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Monomer Price Movement
SM (Styrene Monomer)
Brent Crude (monthly average)
Managing Director – Plastribution Group
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UK Economic Data
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May – July 2023
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Prices continued to rise in October with most polymers following the monomer increases.
Ethylene C2 rose by €65 / MT and Propylene C3 rose by €60. Whilst most producers appear to be going with monomer increases, some are targeting slightly more due to individual shortages of certain products.
LDPE appears to be one of the tighter grades and does appear to be seeing stronger increases than most. PE is fairing slightly better than PP with many key markets for PP such as Construction and Automotive continuing to face economic headwinds.
With PE, we continue to see the effects of reduced imports from the Middle East and USA as the pricing in Europe has been unattractive. Whilst our pricing has improved, we won’t feel the effects for another month or so, expect to see some tightness in key import grades of LLDPE and HDPE. LDPE is not so reliant on imports, but we saw many European producers trying to reduce stocks in the summer and we now see the effects with shortages widely reported.
PP is still struggling with a supply and demand imbalance. Whilst monomer increases are being pushed through, a situation that’s impossible to avoid given the current economics of producing PP in Europe, any attempts at recovering margin are being rebuffed. This puts buyers of PP are in a relatively strong position to negotiate and they are pushing back, attempting to secure increases above monomer.
Outlook beyond October is unclear. Supply and demand remain important to the pricing of Polyolefins, but the cost position is very variable. Oil prices were dropping in early October but started to rise again with global uncertainty over conflict in the Middle East and some suggestions of a rise in China’s demand.
Product Manager – Polyolefins
£/Metric Tonne by month
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LDPE continues to be pushing for increases beyond monomer as availability remains tight and demand reasonable.
Following very strong increases in September, the ambition is not quite as great but +€70-100 / MT is widely reported. Those that achieved higher increases in September are being more moderate now and vice versa.
C4 LLDPE has mostly increased in line with monomer of €65 / MT but we have seen pushes for as much as €100 / MT based on limited availability and delayed replenishment into Europe.
LLDPE is still regarded as a little bit tight in supply but with many converters stocking up in July and August to beat price increases, demand is perhaps a little weaker than expected. C6 grades appear to be more available and are losing a little bit of premium over C4.
Metallocene is a slightly mixed picture with better availability in some general-purpose grades but speciality grades rising above monomer for niche applications.
HDPE has broadly moved with the monomer increase of €65 / MT. Supply and Demand is moving towards being balanced and as with LLDPE, those that could afford to buy ahead in the summer did so reducing current demand levels.
PP continues to struggle to fully pass through monomer increases but is just about managing it as European Producers of PP are either in, or very close to, negative margins.
PP is struggling with demand from key sectors and whilst there are spots of poor availability on some grades, we generally see good availability.
There are rumours of further shutdowns of PP plants following the announcement of a plant closure in Italy for later this year but effects are not likely to be felt until 2024.
EVA pricing has moved in line with monomer. Polyolefin Elastomers prices have moved with monomer but special deals appear to be available as demand is muted.
Contract Styrene Monomer price hits 14 month high.
Styrene Monomer has surged upwards from an all time low in July, settling at €1,635/T, an increase of €60/T on an already high September price. The main driver was a €232/T hike in Benzene, a major SM feedstock.
SM supply has improved, as the long-awaited US imports begin to arrive, and an EU plant has restarted. Due to this it is possible this high could be short lived, rather than a long-term trend. However, this offers little support to polymer buyers with a need to source inventory.
For October, EU GPPS and HIPS has increased by €60T, and EU ABS will increase also.
To compound the problem, GPPS/HIPS/ABS supply chains are empty. Polymer producers have been running output at a minimum due to poor demand, and converters and distributors running inventory at very low levels due to financial pressures. Therefore, the shift in SM/PS prices is likely to have an instant effect.
It is to be noted that the shift in EU styrene monomer is unlikely to have a large effect on Styrenic materials imported from the Far East.
Product Supervisor – Styrenics
£/Metric Tonne by month
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September contract SM rose by €170/T, with PS increasing by similar amounts. Monomer shortages impacted PS supply, where producers had been running at minimum output.
SM supply limitations have faded in October, but monomer hikes (+€60/T) have pushed prices higher, with GPPS and HIPS rising by €60/T also. Availability is back to normal, but demand is still weak.
September ABS rises were not as strong as expected, with increases of around €75/T for EU produced material as feedstocks pushed higher (SM +€170/t, butadiene +€ 35/t, ACN +€86/t).
October ABS is still trending upward, driven by monomer hikes (SM +€60/t, butadiene +€ 70/t, ACN +€128/t). Deep-sea material is more stable, and supply is still outstripping demand.
As usual, PC/ABS price is following the trend of ABS.
SAN and specialities such as ASA and SMMA continue to follow the price trend of ABS.
We continue to see cheaper imports arriving from Asia which puts further downward pressure on the prices of most engineering materials. No real upturn in demand is expected in the coming weeks or months, and it could be there will be no significant recovery of the automotive, construction and EE sectors until well into next year.
The benzene contract settled at €232/t higher than the previous month, so there is now some evidence of producers pushing through small increases on Polycarbonate and PC blends.
Product Supervisor – Engineering Polymers
Engineering Polymer Feedstocks
£/Metric Tonne by month
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With the rising costs of caprolactam some producers have taken a bullish attitude to try and push through significant increases of up to three digits.
There is still extremely poor demand, cheaper imports, and downward pressure on prices.
No real change, weak demand, and cheaper imports from Asia continue to put downward pressure on pricing.
The benzene contract has increased in September but with low demand and more cost-effective imports, it will have little influence on prices.
Demand remains weak, downward pressure on prices with no immediate recovery expected anytime soon.
The outlook remains the same as other polymers, weak demand, and further downward pressure on prices.
Other Engineering Polymers
The situation for other engineering polymers is broadly similar. Most materials are still reducing in price, the market remains weak and there is greater availability from cheaper Asian imports.
Welcome to our first sustainable polymers Price Know-How report!
As our industry pivots further towards eco-conscious practices, Plastribution saw a need to expand our monthly market report to give guidance on a variety of different sustainable material types.
We will start with some basics on recycled materials. As we develop more market data on other sustainable polymers, such as bio-polymers and other renewable feedstock grades, we look forward to expanding this section to make it even more comprehensive, so please subscribe if you haven’t already to keep up to date with the latest developments as they come!
Of course, if you have any questions or feedback around this new section, you are completely welcome to contact me. Otherwise, I hope that you find the information below helpful.
Product Manager – Sustainability
Recycled LDPE / LLDPE
Recycled LDPE / LLDPE has risen roughly in line with prime grades. With prime LDPE rising strongly in price and with some supply issues, buyers have turned to recycled grades more to fill the gaps.
Whilst some sales of recycled PE are driven by a need to comply with legislation on packaging tax, others are looking for a cost reduction over prime. Those looking for higher quality recycled grades with tight specifications, can expect to pay prices like, or higher than, prime LDPE.
Recycled HDPE has also moved in line with prime material. Broad range of pricing continues to be seen with “natural” blow moulding grades suitable for personal care packaging for high street brands continue to command strong premiums over prime grades.
Black, jazz and broad specification grades for pipe etc. are still below prime prices.
Recycled PP has also risen in price but is perhaps not pushing through as strong an increase as PE as demand from key sectors such as Automotive continues to be weak. Spot deals are reported at increases below the monomers seen in prime pricing.
High quality filled compounds with tightly defined specification for more demanding applications still have a premium over prime grades. Price vary depending on specification. Grades that can be overcoloured are typically priced around the same level as prime with natural grades, like HDPE, able to command a significant premium over prime.