Polymer prices – the market expects demand to strengthen in the second half of August
However, in the coming week, with the exception of Hungary, people in most countries will be returning from vacation, and demand is expected to pick up. The increasing purchasing activity experienced in Poland and the Czech Republic does not indicate advance purchases, but normal demand.
All this suggests that the accumulated stocks in the value chains are slowly running out, and packaging material users have started to buy. However, according to some film manufacturers, the purchasing and inventory policies of their customers seem to be changing. They procure smaller quantities and do not build inventories. The likely reason for this is that the spring price spike caused significant losses not only to plastic converters, but also to buyers of finished and semi-finished plastic products.
The markets are now fundamentally cautious. It is unlikely that polymer buyers will panic. The first half of this year was supply-driven, but now the market is shifting to demand-driven.
The first test of this will be in the LDPE markets in the coming week. The strong demand of the past week was disrupted by SABIC FM, after which LyondellBasell ordered an order stop. In addition, the range of Central European manufacturers is not wide either. This, together with the demand that will emerge in the coming week, could cause a significant price increase and a minor buying panic.
The caution is clearly demonstrated by the fact that despite the significant monomer price increase in the case of polypropylenes and polystyrenes, only a moderate price increase was possible, and in many cases, roll-over was also possible in the case of PPC and PPR.
Consequently, both supply shortages and supply cuts in the LDPE market are likely to result in a slight increase of 30–50 euros in the lower end of the price range and in average prices.
Overall, we can conclude that the current price level is neutral, neither high nor low, ideal for the fall season. Smaller – double-digit – price changes are possible based on feedstock price indications in September. However, we do not expect large, triple-digit or close-to-three-digit price movements in the second half of August or September.
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