The excellent 'ICIS Weekly Margin Report - PE' is starting to tell a very sad story about polymer margins. The chart (above) shows that the ethylene margin, in yellow, has been falling steadily since the start of the year. The same is true for the HDPE margin, in blue. And the Report notes that if market conditions don't improve, then Q2 performance 'will see the weakest quarterly result since 2003'
The Report focuses on European markets, but its conclusions apply to all major regions. It calculates the average Q2 margin for integrated HDPE producers is currently €312/tonne, and for standalone producers it is just €61/tonne. It also calculates that margins for the month of May are now as bad as they were at the trough last December. And with feedstocks costs still rising, producers and consumers clearly face a most difficult position next month.
Update, 27 May. The latest Report, just published, shows that the current margin for integrated HDPE producers is now just €118/t, as naphtha prices rose over 6% last week.