Western European buyers of standard thermoplastics achieved small price concessions last month despite initial attempts by producers to hold prices at November levels and improve their profit margins. Sellers were, for the most part, prepared to bow to converter pressure in order to reduce any excess inventories before the end of the year.
Polyolefin feedstock costs saw a minor downward adjustment last month while styrene monomer was up slightly after several months of steep declines. Paraxylene (PX), the key PET feedstock, once again fell sharply.
December LDPE and LLDPE prices were down in line with the ?5/tonne drop in ethylene costs. HDPE prices fell by just less than the reduction in feedstock costs as producers there are determined to improve their under-pressure margins. Polypropylene prices dropped by around half of the ?8/tonne reduction in the December propylene feedstock contract price.
The styrene monomer contract price settled a modest ?/tonne higher in December. Producers were generally successful in holding general-purpose polystyrene (GPPS) prices at November levels, but high-impact polystyrene (HIPS) prices fell by ?0/tonne due to a sharp reduction in butadiene costs.
PVC margins remain under intense pressure following another month of crumbling notations. PET prices also dropped after feedstock costs fell sharply for the second month in a row. Bottle-grade PET prices have now dropped by over ?00/tonne from their peak in March 2011.
Demand steady
Polymer order intake was generally stable at the low levels seen in previous months and in line with the seasonally low period prior to the Christmas and New Year holidays. Polyolefin demand was, however, a bit better than expected, mainly as a result of livelier downstream orders for food packaging. Some converters were also aware of the need to buy additional material in order to achieve their annual bonus entitlements.
Other polymer classes fared less well with demand for PET, PVC and PS particularly weak in December. Converters are reluctant to buy more material than they absolutely need to meet their current production requirements given the extreme economic uncertainty throughput
Supply better balanced
Material availability was generally less long in December and in a better balance with the subdued levels of demand. Polymer producers continued to keep operating rates under control and to shrink their inventories. While the availability of special offers was less in evidence than in November, several producers did offer price concessions to clear excess stock levels last month.
Most plants were operating as normal but several producers called planned and unplanned outages.
Total Petrochemicals declared force majeure on 7 December for HDPE blow moulding material from its plant at
LyondellBasell PP lines in Berre, southern France, are still undergoing a maintenance turnaround.
January outlook
With spot feedstock notations trending upward in December and supply tightening, the majority of market participants with whom European Plastics News spoke felt that polymer prices could be bottoming out and set for an upturn during Q1. End use markets, particularly packaging, are livelier, and with converter stocks relatively low, demand could start to improve in the New Year. Nevertheless, economic uncertainty prevails and a degree of caution will be required.