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The following factors influenced “commodity” polymer prices and price expectations last week:

• BRENT oil price 78.79 USD/barrel, increasing prices,
• EUR/USD: 1.1719, EURO getting continuously weaker
• NAPHTHA: 671.44 USD/t, increasing prices
• demand getting stronger,
• less import from outside of Europe, decreasing supply pressure

One of the major topics of the 21st PLASTPOL was the tendency of prices in June. Both polymer producers and traders agreed that the price increase would be inevitable.  Because of the continuous price increase of the feedstock (oil and naphtha) the increase of contractual monomer prices in June is inevitable.  In particular because the spot monomer prices at the end of May show a permanent, significant deviation compared to the contractual prices. The question is only the extent. Most forecasts say there will be an ethylene and propylene price increase by 50-80 Euro.  But some players do not exclude a price increase by three digits either. Price increase is necessary as the margin of polymer producers has shrunk significantly during the last months. This forces non-integrated producers in many cases to selling with loss. This applies especially to polyethylene grades. The question is only the extent of the price increase the market is capable of coping with. From this point of view the load bearing capacity of PE and PP is different. LDPE came to be the falling star of the market during the recent year.  The 2015 price level higher than 1,500 €/t dropped by 400 € during 3 years.  Price erosion was particularly strong in 2017.  In the middle of May many local producers were forced to sell to larger buyers, who get bonus, at a polymer price below the monomer price. In the short run this was maybe good for converters, but also their buyers are aware of the LDPE price hitting bottom. Slowly they want to get their share from the “profits”. Now only a price increase can prevent this. We are of opinion that in case of LDPE price increase following monomer prices (or even higher) is of advantage both to the sellers and buyers.  A price level of about 1,200 €/t is a desirable goal to be reached in June.  In case of HDPE the situation is similar, with the difference that because of the short supply price increase started as early as in May. But PP shows a different picture, as we have written during the last weeks, on CE level prices start being too high for converters. The starting price of PPH in Poland was 1,150 €/t in Poland, while in the other parts of CE this was rather 1,180 €/t, but typical prices were at and over 1,200 €. But this is too high for larger converters. For companies with longer term contracts and fixed prices even this means high losses. A further price increase by 50 or maybe 80 Euro will clearly prompt them to radically retain their demand. But a price increase exceeding 50 Euro is possible.  The 5.5% weakening of the Euro has, as of the middle of April, opened export markets for European polymer producers. Higher Asian, African and South-American prices enhance PP and PE export. PP supply came to be shorted last week, some WE producers have announced officially and also informally “order stop”.   At the same time they have also increased their PE and PP sale prices by 50-120 € from May.  Ever dropping quantities of PE, PP, PS imported from Europe have contributed to the supply getting shorter.  All this means also that in the summertime we have to live with shorter supply and increasing prices. In spite of this CE converters are not yet afraid. For the time being we have received no news about major pre-purchases yet.  It is true that CE polymer producers have also followed Western producers and for the time being, in the second half of the last week they have increased prices by 40-50 €.  However there are no significant transactions made at this price yet. Probably this increase will continue in June as well. Additionally also a further price increase by 10-30 € is possible when monomer contractual prices become final. 

Polyolefin grades

The price increase has affected LDPE as well, CE prices increased by an average 50 €.  The new price band is 1,120-1,230 €.  There were just a few transactions done at increased prices. Because of the price increase in June that can be taken almost for granted chances for polymer producers to sell significant quantities at the end of the month using special prices are rather low. In this way prices at the end of the month do not undermine the price increase. But converters are not worried even after hearing about the price increases, for the time being there were major pre-purchases. They hope that the broad, always available supply would stay as it is. It is also possible that because of their resistance the significant price increase following monomer prices will fail and only a lower increase will be accepted.

HDPE demand is still high.  There is shortage of HDPE Film and BM grades. Also here producers increased their prices last week also by 50 €. The price range is 1,140-1,230 € depending on the grade and application area.

In case of HDPE (100) pipe the actual price increase is going to happen as late as in June. Expectedly it will follow the actual monomer price change.

Cheap LLDPE C4 starts to run out in Poland. Traders still keep higher quantities in their warehouses, in a price range of 1,170-1100 €. Because of the Euro getting weaker price increase can be expected. Because of the good demand in Asia, Africa and due to the higher prices inflowing import quantities have dropped.  In this way the increase of the general price level can be almost taken for granted. We expect prices in a range of 1,090-1,200 €, depending on the grade and application area.

Also mLLDPE offer prices increased by 30-50 € last week. Supply dropped because of the price increase expected in June, sellers probably wait for the situation to clarify and for the final price level to see.

PPH prices have increased further, polymer producers increased their prices by an average 50 €.  The demand is still very good, the lowest producer prices were at about 1,180 € in the region.  The price range of PPH IM grades is 1,170-1,260 €, depending on the grade, producer, application area and melt index.  In spite of the increasing prices demand is good. A part of the June price increase has already happened last week. If the monomer price increase exceeds 50 € in June, then a further price increase following monomer prices can be expected. 

On the PPC market there was no panic in spite of the 50 € price increase.  The price increase brought forward is an unpleasant surprise. For the time being converters are evaluating the odds.  It makes no sense to buy in advance, maybe it is better to wait until the situation is clear, to wait for the final monomer prices. PPC was offered in a range of 1,250-1,350 €/t in Poland in the second half of the last week.  Prices vary within a range of 1,300-1,350 € in the other parts of Central Europe.  The change of prices in June will follow monomer prices.

On the PPR market the price range is 1,310-1,400 €.  The sudden price increase was a surprise here. Buyers sit and wait.

The prices of the last week are presented in the table below (full truck load 20-22.5 t):

Polystyrene grades

The PS market is also waiting for price increase.  On one hand because of the expected monomer price increase. On the other hand because of the dropping import from outside of Europe. The quantity of goods imported from Iran, Pakistan and Russia is very low.  In June European producers have set the prices. The price change of SM is a big question mark. Last week market players thought there would be a probable price increase by 30-50 € in June.  But it is possible that the olefin monomer prices evolving during the week ahead will drag also SM prices along. In this way even a price increase by 3 digits is possible.

EPS demand is moderate.  For the time being there are no significant pre-purchases because of the expected price increase.  We can anticipate a strong EPS insulation season as of July.   The typical price range is still 1,500-1,620 €/t.  We expect an increase by 50-80 € in June.

The demand for GPPS and HIPS has grown. Yet PS grades with favorable prices from Iran, Russia are missing on the market. The European price range of GPPS is 1,350-1,440 € and in case of HIPS in a range of 1,390-1,530.   By June we anticipate a price increase following monomer prices (by about 50 €).