Polymer prices – prolonged delays in monomer price announcements, uncertain market demand

As a  result, polyolefin and PVC producers only published their valid price  lists in the last days of the last week, and there were polymer  producers who had not yet published their price lists valid for August.  Nevertheless, it is clear that Central European polymer prices have  increased. Demand was not strong, partly due to a lack of information  and partly because there were significant forward purchases at the end  of July.           

The protracted ethylene contract price agreement suggests that  monomer and polymer producers have different interests and opinions on feedstock price changes. Moreover, PVC producers were against a  significant ethylene monomer price increase due to weak demand and  falling prices, as they would not be able to pass the increase on to  their prices. Thus, they waited for the NAPHTHA price minimum last week  (672.63 USD/t) and announced the August contract ethylene monomer price  at the lowest price. This is still not as low as PVC producers would  have liked (+15-30 €/t), but it could have been higher if they had  priced just a day earlier or later, as the NAPHTHA price returned to the  range above 700 USD/t, keeping monomer and polymer price expectations  high.     

Demand is weak for now, primarily because the summer vacation  season is still underway, and there are even companies that are about to  shut down. Secondly, because the more cautious converters already made  purchases in July. We expect a significant pick-up in demand only in the  second half of August. Another reason for the weak demand is that  energy supply uncertainty has developed in three Central European  countries (Hungary, Romania, Serbia) due to the low water level of the  Danube. For this reason, the Hungarian and Romanian nuclear power plants  had to be partially shut down. Also, as a result of the low water level  in the Danube, the Vaskapu (Đerdap) hydroelectric power plant is only  operating at a fraction of its capacity. This means that some larger  converters have implemented partly voluntary and partly mandatory  production cuts. For now, it seems that the low Danube flow will  continue into August, so the uncertain energy supply and demand in these  countries will remain with us until the end of August. In the second  half of August, demand may strengthen as the fall season approaches,  especially if feedstock prices also increase and NAPHTHA maintains a  price level above 700 USD/t.