European polymer prices under pressure

London - After four months of sharply rising notations, European standard thermoplastic prices took a downward turn in July and August. Lower crude oil prices and feedstock costs, better material availability and higher import volumes are the main reasons for the price decline.

Producers attempted to retain as much of the cost reduction as they could in order to swell their profit margins during the first two weeks of August trading. However, prices are likely to have come under further pressure during the last two weeks of August with rebates expected to closely match the cost reduction.

Polyethylene prices saw a weak rollover in July with feedstock unchanged from the previous month, but declined by €50-70/tonne in early August trading.

Polypropylene prices dipped slightly more than propylene costs, declining by €30-40/tonne in July and by €70-90/tonne in August.

Polystyrene prices fell more or less in line with the respective reductions of €85/tonne and €25/tonne falls in styrene monomer costs in July and August.

The severe supply constraints that underpinned the sharp upward price spiral earlier this year are easing. More material is available as force majeures at several crackers, including Lavéra and Moerdijk, and polymer production facilities have been lifted.

The stronger euro and high European polymer prices has started to attract larger import volumes of polyolefins and other polymers from the US and Asia to further boost material availability.

A summary of supply-related developments in July and August is presented below:

• An incident at the Plock, Poland site of Basell Orlen Polyolefin mid-August may have impacted LDPE supply. Signals from the market hint at delivery delays and order stops.

• Unipetrol’s cracker in Litvinov, Czech Republic was switched off again on 13 August as a fire ripped through the cracker following an explosion at an unspecified tank.

• Total on 7 August lifted force majeure for all PP deliveries, including homopolymer and copolymer random grades.

• After experiencing a “mechanical breakdown” as a result of technical problems, Ducor Petrochemicals on 21 July announced force majeure for one of its three PP production lines.

• Unipetrol started an unplanned maintenance turnaround at its cracker in Litvinov, Czech Republic, with the facility taken off stream on 20 July.

Demand held up reasonably well during the holiday season as some converters took the opportunity to buy at lower prices. However, many others preferred to wait for further price discounts and were mostly buying hand to mouth.

Polymer prices are expected to remain under pressure in September as a result of lower feedstock costs and better material availability.