Polymer prices - one more short week, then a price drop
Olefin monomer price expectations show a decrease of -60-90 €/t, and according to some opinions, a triple-digit price decrease in May is not excluded. In the case of styrene monomer, expectations show a price decrease of 0-30 euros. However, specific monomer price announcements are only expected around May 5th.
Polymer prices are likely to track only partially the monomer price changes from their early April base. Following monomer, the average prices and the upper values of the price bands will change, while the lower values of the price bands will only partially follow the monomer price decrease. The primary reason for this is that if the lower values were to fully follow the expected monomer price decline, then, for example, in the case of PPH Raffia, three-digit prices would appear as early as the beginning of May.
While the appearance of triple-digit PPH Raffia prices in May is not out of the question, we had previously expected this to happen only at the start of the summer season, hoping that the Central European maintenance would slow the pace of price declines. For now, the delivered price of PPH import shipments arriving in May and early June is above €1,000, however, the expected weak European demand may push some European PPH prices below €1,000. South Central European PPH producers integrated with oil refineries are already very close to the FCA price of €1,000. Since for these companies PP production is "only" a supplementary activity to oil refining, the most important factor is the utilization of propylene, so they are less sensitive to margins.
In the case of polyethylene, a significant development is that the US-Europe tariff war is not yet underway. It is likely that an agreement will be reached, and the 0% mutual tariff proposed by the European Commission in early April will be accepted. As a result, polymer importers are already beginning to revise their action plans and North American polyethylene imports are expected to resume and even expand. Signs of this can already be seen, for example, in the case of LLDPE C6, pricing is more flexible, and the lower value of the price range has decreased significantly in the past week.
Demand is expected to improve slightly in May, but this will not stop prices from falling. Converters are both cautious and pessimistic. Most people will only purchase the quantities they need in the upcoming summer months. However, one consequence of weak demand will be an increasing number of temporary and in some cases permanent polymer factory shutdowns in Europe, which may lead to temporary shortages of certain grades.
