Price consolidation for polymers in February

21 February 1994 00:00  [Source: ICB]

INVENTORY RUNDOWNS at the end of 1993 appear to have provided a base from which European producers have held prices steady and in some cases are achieving reasonable increases. Even in the weak ldPE and PP sectors prices now look to be coming off the bottom.

PP producers claim 5-8pfg/kg price gains this month in the wake of PCD's 15pfg/kg hike effort from 1 February, which most players are following, assisted by reports of production cutbacks.

Some players are seeing greatest price success in the French, Iberian peninsula and Greek markets, with German increases around the 5pfg/kg mark and Benelux slightly lower. Others refer to increases being most readily accepted in low-value markets like raffia grade.

Hoechst's PP output is rumoured to have been curtailed by a third due to PP supply shortages, as Shell prepares for a one-month turnaround in March at its 180 000 tonne/year Carrington, UK, plant.

South Korea has reportedly withdrawn all PP export offers, at the very least to western Europe, with one trader looking to raise export prices from current lows of $600/tonne CFR Brazil with 180-day credit, $600/tonne cif Nigeria for prime west European material and $535/tonne cif Egypt, where the trader is now asking for $565/tonne cif.

HdPE prices are thought to be stable at their current, abysmally low levels. But traders say west European injection moulding offers are now being seen as low as DM0.90/kg, levels at which Mexico is unwilling to export and Russia is reluctant to do, although this also signals price stability. Producers insist they are keeping inventories down while orders are relatively good.

Most players are looking to each other for a price hike lead, which could be forthcoming in the coming weeks for March implementation. So far, however, there is too much uncertainty for price hikes to be seriously or openly attempted.

LdPE producers are hoping that January was the pricing nadir. Players are suggesting that taking rebates into account prices had fallen as low as DM1.00/kg with imported material as low as 90-95pfg/kg, although such low prices are no longer available.

Producers say customer purchasing in January has been above expectations, thought to be mainly the result of low inventories and purchasing ahead of anticipated price hikes.

As a result first-half February demand has been weak but both producers and customers appear to agree the price late February will reflect at least a 5pfg increase on low January numbers taking prices into the DM1.07-1.12/kg range with further rises targeted in March.

The pricing differential between lldPE and ldPE has all but disappeared following the end of year ldPE price collapse. LldPE prices have remained steady at DM1.00-1.05/kg throughout January and early February but are expected to follow ldPE upwards while maintaining a very much reduced differential.

Players appear divided on the impact of February's startup of the extra 140 000 tonne capacity at the Sharq plant in Saudi Arabia. Some suggest commercial quantities may not be available on the European market for 2-3 months, others that Mitsubishi is already more active in the European marketplace.

PS prices continue to climb with some producers claiming prices of general purpose grades of DM1.55-1.60/kg in place for February with the intention to move into the DM1.60-1.70/kg range in March. One major admits to large customers with prices at, or below the low end of the range and appeared more committed to a March consolidation of the DM1.55-1.60/kg range with further price hikes delayed until Q2.

Strikes and production problems are rumoured to have caused shortages of high-impact grades at one major producer. Another is said to be short of crystal grade. High-impact grades are said to be priced around 10pfg/kg higher. One UK player reported an increased Korean presence as new 1994 quotas allowed import activity to resume, with Russian material also available. Prices are said to be in the mid-£500s/tonne whereas European material was consistently above £600/tonne. Virtually no Mexican or Brazilian PS is said to be available in the European marketplace.

PVC continues strong with price hikes in Italy and the UK moving prices forward to Lira1240-1300/tonne and £490-500/tonne for pipe-grade. Producers have had less success moving prices ahead in the German market with indications that there may have been some decline.

Overall producers see European February prices still at DM1.20-1.25/kg with March prices expected to move to DM1.25-1.30/kg.

Producers claim good demand has made it difficult to build stock for the expected strengthening of Spring demand, with export activity providing net-backs equivalent to European numbers.

Shell's 200 000 tonne/year Berre, France, plant goes into a one-month maintenance shutdown in March but the Spanish facility damaged by fire late-1993 should be fully back up over the next weeks.

Plastics price report
	Market price, DM/kg
	January	February
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	1.04-1.10	1.07-1.12
Polypropylene (PP)
Raffia grade	0.90-1.00	0.95-1.05
Injection moulding	0.95-1.10	0.95-1.15
Copolymer	1.10-1.35	1.10-1.35
Polystyrene (PS)
General purpose	1.50-1.60	1.55-1.60
High impact	1.60-1.70	1.65-1.70
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 January 1994. The right hand column shows the latest prices for February.

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