Polymer prices – may's triple-digit monomer price rise dispels price cut illusions
May olefin monomer prices are up €100 for ethylene (C2) and €120 for propylene (C3). As a result of monomer price increases, polyolefin prices are also expected to increase. The May price of styrene monomer is not yet known, but a price increase, probably in the triple digits, is expected here as well.
Following the minor price corrections in April, plastic converters have become uncertain, waiting for the direction and level of prices to become certain. In the recent period, some converters were realistic and immediately raised their prices, validating the price increase. Most converters have increased their prices, but their cost calculations are based on the average polymer inventory value, which is still lower than current market prices. They were confident that prices would fall and that they would not lose cash-flow on the polymer re-supply. A smaller part of the plastics converters, however, did not even attempt or were unable to raise prices. They prefer to wait and reduce their production.
It seems like everything is available, but this appearance is only due to weak demand. In fact, the European supply is tight and will continue to tighten due to maintenance and shutdowns in Central Europe. Of course, there is import supply, but its volume, for example in the HDPE area, is only a fraction of the quantities lost in Central Europe due to maintenance. High NAPHTHA and further rising monomer prices indicate a tightening of feedstock supply, which is inducing declining European polymer production in the summer months.
With high and rising polymer prices in Europe, very good value offers have emerged following the Chinaplast exhibition. Several plastics converters and traders who visited the exhibition returned with very cheap polymer sales offers, the expected arrival date of which is the end of June, beginning of July. However, their quantity and quality are unknown. The expected continued high price levels will be only slightly influenced by import prices. It is expected that importers will also try to maximize their profits by offering imported products at the cheapest European prices.
Due to the expected permanently high price level, buyers of finished plastic products will be forced to accept price increases in May, but no later than June. This could also bring an unusual summer surge in demand, as plastic converters replenish their inventories based on the new prices. However, hopes of price declines and cheap import offers will continue to put pressure on polymer prices.
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myCEPPI
myCEPPI provides a weekly price report for commodity plastics.
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