Polymer prices - Rising feedstock prices will drive the July price rise
Several European producers have indicated that they have products available despite the order stop, but new orders can only be placed at higher prices. Central European manufacturers kept their prices more stable, but their price elasticity decreased significantly. The development of panic buying and larger scale pre-purchases are hindered by weak demand and uncertain prospects. Yet it is clear to the market that a polymer price increase is expected in July.
Due to the significant increase in crude oil (Brent) and NAPHTHA prices, an increase in olefin monomer prices, currently between 60-70 euros, is likely. But a price increase is also expected for styrene monomer, primarily for imported items. European polyolefin producers are preparing for triple-digit olefin monomer and polyolefin price increases, partly due to feedstock price increases and partly due to margin recovery. This is also indicated by the events of the past week, when some polyolefin manufacturers increased the prices of new orders by up to 100 euros in addition to an order stop. A major central European polyolefins producer tried to raise prices by around €20 last week, without success.
The July price increases are being offset by the fact that both polymer manufacturers and converters have significant inventories, which is why selling pressure is high. But price increases are also being countered by the fact that plastics converters' order backlog is low, demand is weak, and the summer vacation period is approaching. It is already clear that the shutdown of converters will be longer this summer, as many were on vacation last week.
However, a summer price increase is very likely, partly due to shutdowns and partly due to increasing import uncertainty. Shipping in the Middle Eastern waters has become risky, and this will affect oil prices. On the polymer import side, however, there is a shortage of cargo space and an increase in sea freight rates. The import shipments ordered now will arrive in Europe in the second half of August at the earliest. This could lead to a tightening supply of polyethylene.
If the July price increases are only partially successful, we can expect further polymer plant shutdowns in Europe due to a significant decline in profitability. It is conceivable that some Central European polymer plants will again produce in "stop and go" mode. This means that they will only produce if demand increases.
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