Polymer prices – the increase in olefin monomer contract prices in October was in line with expectations

The most important question is which period should serve as the baseline for the price increases. Should the increases be based on prices at the beginning of September or at the end of September?

The main issue in September was the movement in prices. As olefin monomer prices declined slightly during the month, several producers’ attempts to raise prices were unsuccessful. They therefore had to revise their prices downwards as early as the second week of September. Only in the final third of September, after meeting their sales targets, did they raise prices again. Producers that had not increased prices at the beginning of September also introduced increases.

However, very few transactions took place at these prices. There were two reasons for this. First, most polymer producers, and even traders, stopped accepting orders in anticipation of further price increases in October. The second reason was more straightforward: most converters believed they had sufficient stocks to last until the end of October, or even mid-November, and decided to wait for October monomer prices. The converters seeking to buy at the end of September were mainly those that had relied too heavily on tactical waiting earlier in the month. Even in mid-September, they still expected prices to fall further and had therefore not purchased sufficient volumes. These are the buyers who will be looking to purchase as early as the coming week.

The main issue with the price increases introduced at the end of September is that they can be seen as increases implemented ahead of schedule. Plastics converters are trying to interpret them in this way, while most polymer producers do not share that view. The key question therefore remains whether prices should be raised relative to early-September or late-September levels.

The answer will come from the first polymer producers to announce their prices. According to preliminary information, this already happened on Friday afternoon. One of the leading polyethylene and polypropylene producers announced its October prices using early-September prices as the baseline. This means that the increase was calculated by comparing prices at the beginning of the two months. It also means that some prices raised during September may be subject to a correction.

The decision probably reflects an understanding that the polymer volumes produced must be sold in a market where demand is expected to decline from mid-October onwards. An excessive price increase, similar to the one in May, will reduce demand and may subsequently lead to sales at dumping prices. For now, several European polyolefin producers are stating that price matters more than volume, telling their customers to “take it or leave it.”

The EUR 279 increase in the styrene monomer contract price for October came as a major surprise to the market. This was particularly unexpected because the price of benzene, the feedstock, rose by only EUR 240. Under the previous pricing logic, this would imply an increase of around EUR 120, or EUR 150 at most.

Polystyrene producers are also surprised, as the EPS season ends in late October, while demand for HIPS has also collapsed compared with previous years. The first price announcements and initial offers intended to gauge the market’s response are expected during the first two days of the coming week. The risk is considerable: a poorly judged pricing policy could depress demand for weeks, making sales at the end of the season difficult and possible only with substantial price concessions.