European resin prices fall amid reduced feedstock costs, weak demand

Aerial view of the Geel site in Belgium

This report is from our European sister publication Sustainable Plastics. Track these changes in our European resin pricing charts.

In November, standard thermoplastic prices fell across the board largely because of a reduction in feedstock costs and weak demand.

L/LDPE and HDPE prices fell close to the €45/tonne reduction in the cost of ethylene. PP prices fell by slightly more than the €40/tonne fall in the propylene contract price.

Base PVC prices fell by €35/tonne in November, which was more than the proportionate impact of €22.5/tonne on PVC production costs from the lower cost of ethylene.

Polystyrene prices fell by €140/tonne after the styrene monomer reference cost slumped by €149/tonne. PET producers remain under severe margin pressure with very low demand and rising costs. Bottle-grade PET price fell by €15-20/tonne last month.

Standard thermoplastic prices fell across the board once again in early December trading following a further downturn in upstream costs.

L/LDPE, HDPE and PP prices fell by €30/tonne, which matched the reduction of €30/tonne for the ethylene contract price and the €30/tonne reduction for propylene contract price.

Base PVC prices fell more than the proportionate reduction of €15/tonne on the PVC production cost base as a result of the €30/tonne decline in the ethylene contract price.

Polystyrene prices fell by €105-110/tonne, which was slightly less than the €116/tonne reduction for the styrene monomer reference price. PET prices slipped again as a result of lower costs and very weak demand.

Demand very weak

In November and into early December, polymer demand remained well below what would normally be expected for the season. In view of the economic uncertainty around Europe and the weakness in most end-use markets, converters are buying just sufficient material to meet their immediate production needs. Converters also reacted to the rising price trend by calling off stocks which had been built up in their warehouses during the summer.

Ordering activity will be further restrained this month as many converters shut down their plants during the Christmas and New Year holiday period.

Supply adequate

In November and into early December, material availability was more than adequate across all polymer classes despite producers tightening run rates even further to better balance material availability to the low demand. LLDPE, HDPE, PP and PET supply was swelled by a steady inflow of imported material.

In the PET sector, JBF Industries announced the closure of one of its PET lines at Geel, Belgium in October for economic reasons. JBF may now be about to shut down its second line at Geel with the future of the plant uncertain.

A selection of the latest supply-related developments are summarised below:

JBF Global Europe announced the temporarily shut down of one of its PET plants at Geel in Belgium in October and the company subsequently announced that the second line would cease production in November due to economic reasons

BP announced force majeure for propylene and ethylene production at its facility in Germany on 6th November

Repsol declared force majeure for several intermediate products including propylene oxide and styrene monomer following a fire at its El Morell chemical plant in Spain on 22nd November

Kem One announced on 8th November that it will cut chlorine and caustic soda production run rates in France

Ineos plans to cease operations at the smaller and older of its two production lines for terephthalic acid (PTA) at Geel, Belgium citing high costs, and added that production in Europe is not competitive with imports from Asia.

January outlook

Polymer prices are expected to continue falling into the New Year along with declining upstream costs. Demand is unlikely to see a major upturn in the short term. Producers will keep a brake on plant operating rates on order to facilitate market balance.

L/LDPE

In November, L/LDPE prices fell by an amount close to the €45/tonne reduction for the ethylene contract price. There was no discernible improvement in demand while producers maintained strict production controls. LLDPE availability was supported by a growing supply of imports.

L/LDPE prices continued to slip during the first week of December after a further reduction in upstream costs. L/LDPE prices fell by €30/tonne, which matched the €30/tonne fall for the ethylene contract price. The L/LDPE market was well supplied despite production cutbacks. Converters are running down stocks as year-end approaches and only ordering enough material to meet immediate production needs, which is further dampening demand.

HDPE

In November, HDPE prices fell by €40-50/tonne compared to the €45/tonne reduction for the ethylene contract price. Output from local producers remained significantly restricted yet overall availability continued to be supported by imports. Demand persisted at a low level.

HDPE prices continued to fall during the first week of December after a further reduction in upstream costs. HDPE prices fell by €30/tonne across the board to match the €30/tonne fall for the ethylene contract price. The HDPE market was well supplied despite production cutbacks. Converters bought just enough material to meet their immediate production needs as the year draws to a close.

PP

PP prices fell €40-50/tonne in November compared to the €40/tonne fall for the propylene contract price. Material availability from local producers was tight because of low production rates and a series of planned and unplanned plant outages. Imports from the US and the Middle East, however, boosted overall supply. Demand remained low as many converters refrained from topping up their inventories even though prices had become more favourable.

PP prices continued to drop in early December trading as upstream costs have fallen further. PP prices are down by €30/tonne, which is equal to the reduction of €30/tonne for the propylene contract price. The PP market is well supplied despite production restrictions. Buying activity is likely to fall even further as many converters shut down their plants during the holiday period.

PVC

Base PVC prices fell by €35/tonne in November, which was more than the proportionate impact of €22.5/tonne on PVC production costs from the lower cost of ethylene. There is still plenty of material available despite production cutbacks and a series of planned and unplanned plant outages. Demand remained at very low levels particularly as the construction sector is approaching its winter hibernation.

PVC prices continued their downward trend in early December trading as a result of lower feedstock costs. Base PVC prices fell by €25-30/tonne, which represents a steeper price rebate compared to the proportionate reduction of €15/tonne on the PVC production cost base from lower ethylene costs. There is more than enough material available to satisfy demand despite severe production cutbacks. The short production month will further restrain the already very weak demand.

PS

In November, the styrene monomer reference cost plummeted by a surprisingly large amount, down by €149/tonne following a sharp reduction in spot styrene monomer prices over the previous few weeks. PS producers initially announced planned price rebates of €125/tonne, yet for the month as a whole, general-purpose PS pries fell by €140/tonne. Producers continued to throttle production but volumes were still sufficient to meet the low levels of demand.

At the beginning of December, polystyrene producers announced planned price cuts of €80-90/tonne following a further large reduction of €116/tonne for the styrene monomer reference price. PS producers managed to hold onto part of the cost reduction during early December trading with general-purpose PS prices down by €105-110/tonne. Supply remained adequate despite reduced run rates and an outage at a PS production plant in Spain.

PET

In November, PET prices fell slightly following a decrease of €50/tonne for the October paraxylene reference price. European PET production remained at minimum levels but overall supply was maintained by an inflow of competitively-priced imported material. The reduction in PET imports from China caused by the imposition of duties on Chinese product at the beginning of the month was more than offset by imports from other Asian countries. Demand continued at a very low level.

PET prices fell again in early December trading following a reduction of €42/tonne for the November paraxylene reference price and weak demand. The European PET market is well supplied by imports despite very low run rates and plant shutdowns by local producers. The very weak demand situation has prompted many converters to shut down for an extended period over Christmas and New Year.

* source : https://www.plasticsnews.com/resin-pricing/european-resin-prices-fall-amid-reduced-feedstock-costs-weak-demand