Values up on supply/demand

05 March 2007 00:00  [Source: ICB]

This Plastics Monitor continues a change of methodology in reporting commodity polymer prices in the magazine. It now uses data and prices collated from our sister service ICIS pricing. If you have any questions, email john.baker@icis.com.

"Suppliers were still looking to improve margins, and recoup losses made at the end of 2006"

 

Snug high density polyethylene (HDPE) supply has led to increases in February contracts averaging €30/tonne.

The supply situation had been affected by two producers running at reduced rates in December and into 2007, along with limited imports. INEOS intends to close its 180,000 tonne/year HDPE blowmoulding plant in Scotland at the end of this year, while increasing capacity in Belgium by 2009. This would leave a gap, which concerned some buyers.

Demand was reasonable, especially for blowmoulding. An increase of €60/tonne is in the pipeline for March.

Linear low density polyethylene (LLDPE) numbers moved up by an average €10-20/tonne in a market environment supportive of hikes.

Demand was good, and with upward pressure coming from feedstocks, at least one seller was talking of €60/tonne increases in March. Availability was snug. Hexene was reportedly more expensive than octene in some instances, and butene was also tight.

Some central European production was said to have been reduced due to high spot ethylene prices. Force majeure at Polimeri's 200,000 tonne/year LLDPE facility at Priolo, Sicily, was due to be lifted on 1 March. This has been in place since May 2006.

Low density polyethylene (LDPE) prices rose by €20-30/tonne in February, pushed up by tightness. The market was reportedly being kept in balance as a result of exports of European material to north Africa.

Suppliers' thoughts on March prices centred on a €50/tonne hike, but converters were quick to interject. The €45/tonne drop in first quarter ethylene prices did not support a further increase in PE prices, they said. However, producers took the view that higher numbers in the first quarter would counteract the losses incurred in the last quarter of 2006.

Polypropylene (PP) contracts rose by ­ €10-20/tonne, although some reported a rollover. Prices were propelled by strong propylene values, with a tight market expected as a result of turnarounds.

Demand was good, and availability was restricted. Suppliers were still looking to improve margins, and recoup losses made at the end of 2006. March price hikes were in the offing, although targets have not been announced. Buyers were looking for a rollover, disagreeing with producers' argument that margins needed a lift.

Polyvinyl chloride (PVC) prices in February varied. In Italy, prices dipped by €15/tonne. Elsewhere, rollovers were reported, along with decreases of €10/tonne. Only in the Spanish market did numbers move upwards, with a reduction in imported PVC resulting in increases of €10/tonne in some cases.

Demand was said to be good, but some suspected an element of pre-buying. Hikes for March have already been targeted, amounting to €35-40/tonne. In the next couple of months, a number of plants are scheduled to shut down for maintenance.

 

Product January February
High density polyethylene (HDPE)
Injection moulding 1,190-1,220 1,200-1,230
Film (extrusion) grade 1,190-1,210 1,200-1,230
Blow moulding 1,190-1,210 1,210-1,230
Linear low density polyethylene (LLDPE)
Film grade (butane-based) 1,110-1,150 1,120-1,150
Low density polyethylene (LDPE)
Film grade 1,160-1,170 1,170-1,190
Polypropylene (PP)
Raffia grade 1,120-1,160 1,130-1,160
Injection moulding 1,140-1,190 1,150-1,190
Copolymer 1,200-1,240 1,200-1,240
Polystyrene (PS)
General purpose 1,365-1,370 1,315-1,330
High impact 1,415-1,420 1,360-1,370
Polyvinyl chloride (PVC)
Suspension 990-1,030 990-1,020The left-hand column gives a guide to price levels for large- to medium-size buyers for general-purpose grades in January. The right-hand column shows the latest prices for February. Implied exchange rates are based on 26 February 2007 levels of: $1:€0.760 $1:£0.509 €1:£0.671. (R)-revised.

 

Snug ps market aids margin improvement

Polystyrene (PS) became uncomfortably tight in Europe during February, following the recent capacity closures. Certain grades of general-purpose PS were in very short supply, prompting one supplier to put an order stop on new sales.

With this backdrop, producers were able to benefit from a margin improvement by retaining about half of the decrease in styrene monomer (SM) prices in February. Styrene contracts fell by ¤95-108/tonne, while PS prices fell by around ¤50/tonne. Sellers were keen to stress that margins needed to be maintained at a reasonable level in order for the industry to remain viable. Additionally, it was crucial that the gap in price between PS and polypropylene (PP) didn't get large enough to make substitution an attractive option. High impact PS availability was less affected by the recent closures.

Targets for March depend on the styrene market, where an increase in March barge contracts to €1,050-1,080/tonne FD NWE has been agreed (see Market Trends, pages 38-39).

The outlook for China's polymer market after the recent New Year holidays was mixed, despite the peak agriculture film production season in March.

Prices could be pressurised by high stocks and a slow pick-up in demand.

Traders expect a gradual upturn, since most converters do not normally return to full operation until early March. Furthermore, the packaging industry will enter a traditional low season after the holidays, said traders.

Imported material at the Shanghai port is at twice its normal stock level. This, combined with cargoes expected from the US, will dampen prices.

Buying Interest Lacking After Holidays

Asian polyethylene (PE) prices were little changed in February as trade was thin after the Chinese New Year holidays. Prices for all grades ranged from $1,230-$1,320/tonne CFR northeast Asia. Meanwhile, ethylene values eased as supplies rose.

High density polyethylene (HDPE) offers for film grade rose $10-30/tonne to $1,280/tonne CFR China for March cargoes.

Polyethylene Malaysia cut its production rates to about 90% in February, when ethylene prices rose. PTT Chemical has shut both its 250,000 tonne/year HDPE plants in the Rayong province in Thailand for turnarounds until March. Going forward, South Korea's LG Chem will probably also shut its plants at Daesan for two weeks in March. The company has a 150,000 tonne/year HDPE plant, an 80,000 tonne/year LLDPE line and a 280,000 tonne/year polypropylene (PP) plant.

Meanwhile, prices in February for blow­moulding grade ranged from $1,230-1,250/tonne CFR China/southeast Asia for March shipment, unchanged from a month earlier.

Linear low density polyethylene (LLDPE) prices were at $1,305-1,310/tonne CFR China/southeast Asia for March cargoes, up $10/tonne from the beginning of the month. Numbers are expected to rise in March on increased demand during the peak production season of mulch film. But, some traders are less bullish, citing factors such as excess inventory, which could weigh on prices (see box).

More low density polyethylene (LDPE) supplies are expected in March as Qatar Petrochemical Co (Qapco), a major Middle East manufacturer, is due to restart its LDPE plant. The 400,000 tonne/year plant at Mesaieed, Qatar, was shut for four weeks.

Polypropylene (PP) values barely changed in February, with buying interest still limited, even after the Chinese New Year holidays. Prices ranged from $1,210-1,290/tonne CFR China/southeast Asia.

Producers recently offered PP injection/yarn grade at $1,270-1,280/tonne CFR China for March shipment, but demand remained thin.

Meanwhile, biaxially oriented PP (BOPP) film grade prices were unchanged at $1,260-1,270/tonne CFR China/southeast Asia.

Buying interest was also thin for injection/flat yarn grade, with prices in late February at $1,270-1,280/tonne, up from $1,250-1,270/tonne at the beginning of the month. Traders said that they expect more deep sea material booked in the fourth quarter of 2006 to arrive in China this month, which may dampen Chinese prices.

Block copolymer prices were at $1,280-1,310/tonne CFR China, little changed from early February.

Thailand's Thai Propylene plans to shut its 180,000 tonne/year plant this month for one to two weeks of maintenance. And, South Korea's LG Chem may shut its plants in Daesan for two weeks, including a 280,000 tonne/year PP plant.

Polystyrene (PS) demand remained weak, despite the return of buyers and sellers in China, Taiwan and Hong Kong this week, following the holidays. Sellers anticipate a slight improvement in demand in March when end-users replenish stocks. However, a significant improvement is expected only from late May when the traditional manufacturing season in China kicks in. In February, prices were around $1,360-1,390/tonne CFR Hong Kong for GPPS and $1,400-1,430/tonne CFR Hong Kong for HIPS.

Asian polyvinyl chloride (PVC) values were at $850-860/tonne CFR China and $840-850/tonne CFR Hong Kong, which is a $40-50/tonne hike from $810/tonne CFR China and $800/tonne CFR HK in January. Higher prices were stoked by rising feedstock costs, tighter supply and improving demand.

However, trading volumes had shrunk to a third of their normal quantity, due to the Chinese New Year holidays.

Initial March offers were set to be a moderate increase of $10-20/tonne at $860-880/tonne CFR northeast Asia.

Asian commodity polymer prices, $/tonne
NE Asia SE Asia
High density polyethylene (HDPE)
Film grade 1,250-1,270 1,250-1,270
Yarn and injection moulding 1,230-1,250 1,230-1,250
Linear low density polyethylene (LLDPE)
GP film grade 1,260-1,280 1,260-1,280
Low density polyethylene (LDPE)
GP film grade 1,290-1,310 1,290-1,310
Polypropylene (PP)
GP film grade 1,240-1,260 1,250-1,270
Raffia/injection moulding 1,210-1,230 1,230-1,250
GP copolymer 1,250-1,280 1,270-1,290
Polystyrene (PS)
General purpose 1,360-1,390 1,370-1,390
High impact 1,400-1,430 1,410-1,440
Polyvinyl chloride (PVC)
GP suspension 840-850 840-870The above prices are only intended as a guide to market levels. Special grades of material may command premiums. All prices on this page are supplied by ICIS pricing. We accept no liability for commercial decisions based on information/prices reported in this magazine.





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