New year brings new pain and new gains

24 January 1994 00:00  [Source: ICB]

PLASTICS PRODUCERS are reporting a relatively upbeat start to the year in terms of orders and pricing, with only and PP players seeing further price falls in late December and January.

January PP orders are said to be picking up as well, if not faster than usual for this time of year, with most prices stabilising after some erosion during the December/holiday period. Converters are reported to be in need of product after drawing down on year-end stocks.

In addition to regular orders, speculative purchases are being made before 1 February, when producers are preparing to push fresh price hikes. One major player specified a 15pfg/kg effort.

German PP demand is still described as 'a little weak' and southern European material is thought to have contributed to 10 centime price reductions in France to new levels of FF3.00/kg for injection moulding and FF2.85/kg for raffia. But Polychem is believed to be sold out of product, helping stabilise Benelux raffia prices at around BF19/kg.

Far East prices are thought to have firmed to the $510-525/tonne cif range. Some lines at the 120 000 tonne/year ROW plant at Wesseling are to go down late January for one month 'in preparation for a catalyst change', although the change itself will only take place during a planned June/July turnaround.

HdPE markets are relatively quiet with prices stable and no talk yet of planned price hikes, which are expected to come in slowly when the opportunity does arise. Producers are hoping for significant indications of improved demand by late January/early February.

The current hiatus, carried through from the holiday period, has been causing west European plants to reduce their operating rates from 75-80% to less than 70% on average, producers say.

Dow's 105 000 tonne/year Tessenderlo unit is back onstream after its December shutdown. Industry sources report stocks down to five weeks' supply - their 'lowest level for two years'.

No respite on pricing for ldPE producers is in sight, at least as far as January is concerned. Prices which had fallen back in December to DM1.10/kg as producers attempted to clear inventories for the year end have continued their fall in January with producers quoting prices as low as DM1.00/kg for January, although the bulk is said to be in the DM1.04-1.10/kg range, with business slow to pick up after the Christmas break. Italian producers' January sales are suffering from strong December pre-buying ahead of the imposition of a 10% tax on polyethylene film on 1 January.

European export business was substantial in December and January - the highest for four years - and production outages and cutbacks have helped hold inventory levels steady over the holiday period. Producers are looking for February price hikes into the DM1.15-1.22/kg price range, with some suggesting a goal of a DM1.25/kg minimum price in March. DSM's new 185 000 tonne/year ldPE plant at Beek is said to be in the startup phase and running at around 60%, but operating rates will depend on market conditions.

LldPE pricing has by contrast shown remarkable stability with the majority of business still around DM1.00-1.05/kg, radically cutting any pricing differential with ldPE. Price increases in February are envisaged with producers expecting to maintain a narrowed 5pfg/kg differential with ldPE.

PS prices were strengthening at the end of 1993 and have managed to hold their position in early January. Producers have continued to hold back on production, and Far East prices rising to $650/tonne cif Hong Kong have attracted European material.

Major producers are now trying to consolidate the current levels of DM1.50-1.60/kg and bring the lower prices up to their target for Q1 of DM1.60/kg for crystal grade. They admit that some large buyers are at the lower numbers and that if these resist the hikes there is some possibility of a slight fall-back.

November and December offtake looks to have been boosted by pre-buying in anticipation of further increases. Consumption for the year looks to have been down by about 3% on 1992 - less than expected at the half-way mark.

The UK is still a little behind in pricing terms, at £620/tonne, with France stronger at the equivalent of DM1.60/kg and Italy around DM1.55/kg.

PVC too has maintained its pricing strength into 1994, although January levels have not reached the DM1.30/kg being sought by most producers. A gain of 3-5pfg/kg has been achieved however, putting pipe-grade prices at DM1.22-1.25/kg. Higher levels are claimed in France and Belgium, with DM1.30/kg achieved in some instances due to local currency strength.

Material is tight and exports to the Far East are proving attractive as prices there rise to $650/tonne as the US withdraws because of its strong home demand. Stocks at producers are said to be low still, although not as low as in December. European producers are hoping that US and South American imports will not return in strength in Q1, aiding price efforts.

Plastics price report
	Market price, DM/kg
	December	January
High density polyethylene (hdPE)
Injection moulding	0.95-1.00	0.95-1.00
Film (extrusion) grade	1.00-1.05	1.00-1.05
Blow moulding	1.00-1.05	1.00-1.05
Linear low density polyethylene (lldPE)
Film grade (butene based)	1.00-1.05	1.00-1.05
Low density polyethylene (ldPE)
Film grade	1.10-1.15	1.04-1.10
Polypropylene (PP)
Raffia grade	0.94-1.04	0.90-1.00
Injection moulding	1.02-1.12	0.95-1.10
Copolymer	1.15-1.40	1.10-1.35
Polystyrene (PS)
General purpose	1.45-1.55	1.50-1.60
High impact	1.55-1.65	1.60-1.70
Polyvinyl chloride (PVC)
Suspension	1.20-1.25	1.20-1.25
The left hand column gives a guide to price levels for large-to-medium size buyers and for general purpose grades in December 1993. The right hand column shows the latest prices for January.

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