Sustainable Plastics - May/June 2020 - 36

polymer prices

Prices edge higher despite
subdued sales

uropean
standard
thermoplastic prices
plummeted to multiyear lows in May as a
result of lower upstream costs
and weak demand. Polymer
prices turned a corner in June
following a rise in crude oil and
feedstock costs. However, demand was largely subdued and
polymer producers successfully
introduced measures to control
supply by production cutbacks.
In May, L/LDPE producers
limited price reductions to less
than half of the €100/tonne fall
in ethylene costs, with HDPE
prices falling by slightly more.
By mid-June, however, both L/
LDPE and HDPE producers had
passed on €40-50/tonne of the
€60/tonne rise in the June ethylene contract price.
PP producers had to pass on
most of the €80/tonne reduction
in the propylene May contract
price to buyers. By mid-June,
PP buyers resisted paying the
full monomer hike of €60/tonne
with settlements ranging from
€40-50/tonne.
PS prices stabilised in May
and had increased by slightly less
than the €64/tonne rise in styrene
monomer costs by mid-June.
PVC producers passed on
in full the €50/tonne impact
on their cost base of the €100/
tonne reduction in ethylene
costs in May. By mid-June, PVC
prices had increased by €30/
tonne compared with a €60/
tonne rise in ethylene costs.
May PET deals were closed
with decreases of €30/tonne,
which was slightly more than the
proportionate impact of a lower
cost base before stabilising by
mid-June.

Demand patchy
Demand started to pick up in
May as several European countries eased the lockdown restrictions, but varied widely between
sectors. Food and hygiene packaging markets continued to perform well, but polymer demand
remained well below normal for

May/June 2020

Prices Monitor January 2019 - February 2020
2.0

PET

PVC LLDPE HDPE LDPE PP

1.5

1.0

industrial, construction and automotive markets. Many largescale converters took advantage
of the low prices on offer to top
up inventories.
With many large-scale converters sitting on comfortable stocks due to their earlier
pre-buying activities, demand
was below normal up to midJune. Nevertheless, there appears to have been an upturn in
consumer spending on non-essential items such as houseware
products and an increase in
construction activity. The automotive industry, meanwhile, remained subdued.

Supply tightens

In May, material availability
tightened as producers initiated
strict production controls. Several planned and unplanned plant
outages also restricted output.

*
Versalis
shut
its
490,000 tonnes/year steam
cracker in Brindisi, Italy for a
planned maintenance mid-May.
*
Qatar Petrochemical
Company declared force majeure on its deliveries after a
production line in Qatar was unexpectedly shut down on 3 May.
Qapco operates LLDPE production through Qatofin, a joint venture it has along with Total and
state-owned Qatar Petroleum.
*
As a consequence of
the fire at Borealis' cracker in
Stenungsund, Sweden on 9 May,
the polyolefins producer declared force majeure on cracker
activities at the site.
Earlier, Kem One lifted the
force majeure on PVC production from its plant in Saint-Fons,
France 30 April. The company
had declared the force majeure
as a result of the interrupted

navigation on Rhone River back
in February.
Supply remained well balanced in June as producers
maintained tight production
controls. HDPE and LLDPE
imports declined compared to
previous month as Asian markets became more attractive
to exporters.

July outlook

Standard thermoplastic prices may sustain firming in July
driven by the rising upstream
markets. OPEC and its allies
extended oil cuts, which have
pushed crude oil prices above
the $40/barrel mark. Demand
can reasonably be expected to
grow later in the month and into
July in anticipation of further
price increases. Meanwhile, production controls remain to control polymer supply.

Sustainable Plastics - May/June 2020

Table of Contents for the Digital Edition of Sustainable Plastics - May/June 2020