Producers win polymer price hikes in March

London - After falling since the middle of last year, European standard thermoplastic prices rebounded sharply in March. Producers pushed through margin-extending price increases following a large upswing in petrochemical feedstock costs, better demand and tightening supply.

Crude oil prices rose from just less than $50 (£36)/barrel to around $65 (£48)/barrel during the month of February. As a result, March petrochemical feedstock contract prices were settled at a substantially higher level.

Styrene monomer led the way with an astonishingly high €175 (£128)/tonne leap in the March contract price. The ethylene and propylene contract prices saw respective gains of €100 (£73)/tonne and €105 (£77)/tonne.

Plastics producers took advantage of the upturn in feedstock costs to force through price rises exceeding the rise in their cost base.

The dawn of spring saw the usual upturn in seasonal demand for all polymer types. Order intake was lively as converters sought to buy additional volumes of material to replenish their inventories in advance of an expected increase in final demand and production.

However, in view of the tight supplies, some producers imposed order stops by the middle of the month. The high prices being asked for by producers also made some buyers think twice about buying excessive quantities.

Supply shortened for several polymer classes in March as a result of continued planned and unplanned cracker and polymer plant maintenance programmes. Meanwhile, the euro-dollar exchange rate continued to plunge to fresh lows, making imports more costly and less competitive.

Polymer producers will no doubt be looking to capitalise on the margin gains made during the first quarter of the year no matter what happens to crude oil prices during the rest of March.