Polymer prices – uncertainty for polymer producers, led to a small fall in polyolefin prices
The decrease in polyolefin prices affected not only the upper end of the price band, but also the lower end of the price bands and the average prices. Expectations of price reductions are supported by the low inflow of imports from the Far East and North America, which are expected to be very low in June and July for some grades and applications.
Polyolefin producers in Central Europe have been and will be forced to partly meet expectations, despite the fact that maintenance is expected in Central Europe and overall supply and availability is decreasing. At the same time, the polymer inventory levels of plastic converters are also decreasing. Most polyolefin converters have 3-4 weeks' supply of polymer. They will need to buy in the coming weeks, but the supply from polymer manufacturers is only seemingly wide. When purchases start in the next 2 weeks, the market could face a real shortage of availability and supply, which could result in a very high price range for some grades. In order for purchases to start, converters need to be sure that prices will not fall further in the next 2-3 weeks, that the bottom is temporarily here. However, due to the continuous influx of cheap import offers, the amplified news surrounding them, and the price reductions seen last week, the coming week will likely also be characterized by a wait-and-see attitude. Purchases are likely to slip into the last week of May or even early June. In fact, even regular customers will wait at the beginning of June, fearing a mid-month price drop.
Based on current feedstock trends, no price decrease is expected for olefin monomers, and in fact, a smaller price increase of 30-60 euros for ethylene is possible in June. The price elasticity of polymer producers using purchased ethylene and propylene is slowly coming to an end. Although European oil supply is currently continuous, market participants expect tight supply in the coming months, as evidenced by the oil price of around $110 and the NAPHTHA price of around $900. Thus, the only source of polymer price decreases can only be imports. However, the volume of incoming polypropylene imports from the Far East at very low prices is barely a few thousand tons, and the range is limited to only a few grades. For North American polyethylene, supply is expanding but the declining price is mainly for LLDPE and HDPE, with the price of imported LDPE and PET showing no real price advantage over Europeans.
The majority of converters have only passed on the March polymer price increases to their customers, and for the time being, the lower average polymer inventory value than the current market price still allows for positive margins. If polymer prices remain as they are, another price increase will be necessary. Many are hoping that prices will fall, or even that the weak summer demand will bring them down further and that they will be able to get away with raising prices to their customers.
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