Standard thermoplastics at the beginning of March 2008
Standard thermoplastics at the beginning of March 2008: Turnaround or correction? / Most producers reduce planned hikes / Tendency to oversupply starts to pressure polyolefins / PVC largely stable / Monomer rise influences PS and EPS
With prices pointing continuously upward since the beginning of the year, the vast majority of western European buyers of standard thermoplastics got a break in the first week of March, as it became obvious that producers’ price offensive for the end of Q1 was taking hold only for styrenics. EPS rose by EUR 65/t and PS by EUR 40/t.
The most likely scenario for most PE grades this month is a rollover, although the plentiful PE injection moulding grades and the HDPE blown film grades initially slipped by around EUR 15/t. Even structurally short EVA is fairly stable within this overall trend.
PP, too, has lost some of its momentum. Producers’ contract business is still holding up, but spot notations are falling so swiftly that some distributors are having to shave as much as EUR 15/t off their prices.
The range of PVC movements extended from a rollover and a few reported hikes of EUR 10/t to a proposed rise of EUR 20/t for contracts signed retroactively.
As Q1 winds down, the availability of LLDPE has improved slightly, with the extent of improvement depending on the source and the grade. The prevailing tightness for EVA – especially for higher-grade material – is easing only slowly.
The Polimeri Europa plants at Dunkirk (C2 and PE) and the Ineos plant at Saralbe – both in France (PP) are back on stream.
A number of plants were still down in the first half of March, including the Ineos facilities at Cologne / Germany (PE) and Antwerp / Belgium (HDPE), LyondellBasell at Aubette / France (LDPE) and LVM at Tessenderlo / Belgium (VCM). FM was still in place at BASF's styrene facility in Antwerp / Belgium. Maintenance at LyondellBasell's styrene plant at Maasvlakte / The Netherlands has been rescheduled for the second half of March.
The PP market is being fed with imports from Brazil and Africa, along with significant volumes of PE and PP injection moulding grades from Nigeria. PVC is flowing into the Mediterranean region from many different sources.
Supply still exceeds demand for the more specialised film grades of LLDPE and EVA. Apart from LDPE, which is enjoying brisk seasonal sales, polyolefins are being ordered more slowly. Orders for PVC are normal, apart from the pipe business. Demand for PS is fairly weak, while EPS is more or less as expected. Another factor dampening demand is that March has only 19 production days.
On the upstream side, oil futures on the US commodities exchange Nymex passed USD 108/bbl on 11 March. This pushed naphtha to an all-time high of USD 887/t – from USD 876/t at the beginning of January 2008.
The exorbitant cost of naphtha triggered a dramatic reaction in Asia in the first two weeks of March, with cracker output slashed by around 2.7m t or even halted altogether. With ethlylene prices comparatively low, affected companies said their margins were completely inadequate.
