Europe plasticizers spot prices at 13-month high, no sign of year-end slowdown

Author: Jane Massingham

2020/11/27

LONDON (ICIS)--As sources embark on December talks for European  plasticizers, spot prices have reached 13-month highs and there is no sign of the traditional year-end slowdown.

- Limited supply and good demand 

- Consumers build stock

The supply/demand balanced has pushed prices higher and spot numbers reached levels last seen in October 2019.

“It is not a price issue - it is an availability issue today,” one seller said.

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SUPPLY: UNPREPARED FOR UNUSUAL YEAR-END
At this point in the year, European sources are normally preparing for business to tail off and wind down to year end.

2020 has delivered many changes to traditional buying patterns due to the pandemic and the latest supply/demand balance is driving the market up.

Availability of both diisononyl phthalate (DINP) and dioctyl terephthalate (DOTP) is tight for some players, though contract customers would argue that material can be located to cover demand.

There are limitations for feedstock isononanol (INA) for DINP within Europe and non-integrated manufacturers are facing some pockets of shortage, according to sources.

There is still a distinct lack of imported material from Korea for both DINP and DOTP.

Imports of DOTP from Russia also remain low as SIBUR continues to concentrate on domestic demand.

Turkish material which had been seen into both northwest Europe (NWE) and the south is also expected to be less in the short term as local demand is healthy.

The recent unplanned outage at LG’s cracker in Korea is expected to have further ramifications into the New Year for DOTP volumes into Europe.

Deza will go into a planned downtime in December for DINP.

DEMAND: 'NOT MUCH TALK ON PRICING'
Those with material talk of stronger-than-expected demand; consumption has been good to many sectors and sales for various buyers are back to levels during the same period in 2019.

The fourth quarter has certainly proven to deliver a stronger demand pattern that many were prepared for, so any kinks in the supply chain have been felt quickly.

“What we produce, we sell, and there is not much talking on pricing," one producer said.

There are limitations on downstream polyvinyl chloride (PVC) markets and this, in turn, has curbed some demand, but is dependent on application.

Nevertheless, some sources said it was a ”daily and weekly battle” to locate the PVC required.

The supply/demand balanced has pushed prices higher and spot numbers reached levels last seen since October 2019.

While demand is good, there is no structural shift higher, and sources note that the market is largely driven by the supply constraints, but year-end buying patterns are proving to be different from the usual trends.

STOCK PILING, NOT DESTOCKING
The traditional pattern of running stocks low at year end is out the window this year for many; customers are keen to have good supply of the end product in stock for the start of the year.

The concerns of impacts from the coronavirus pandemic have prompted many to change strategies for year-end; some sources said that these buying patterns could continue at least until a vaccine is widely distributed.

Consumers in the UK have the added pressure of preparing for Brexit and one buyer commented that “it is very hard" to stock pile.

There is some trepidation that supply and logistics will be disrupted in the first week of January as the transition period comes to an end and new tariffs are introduced.

Plasticizers are used in plastics or other materials to impart viscosity, flexibility, softness, or other properties to the finished product.

Front page picture source: Jochen Tack/imageBROKER/Shutterstock 

Focus article by Jane Massingham

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