Weak demand continues to be dominating force / Polyolefins and PVC experience rollovers / SM drives PS upwards / PET continues on decline / Reductions likely in September

PE: As expected, European producers were unable in August to factor the small increase in the C2 reference into prices of most PE materials. The exceptions were the pipe grades, where a FM declaration limited supply, and buyers paid the reference hike in full. All other grades ended in a weak rollover. With many players assuming that prices had bottomed out, demand picked up slightly. The early calls by some producers for hikes of up to EUR 50/t in September seem to be illusory in view of the EUR 40/t fall in the C2 reference. The expected tightening of supply due to the autumn maintenance season could mean that the cost reduction might not be passed on in full. Price cuts will be more or less unavoidable even if business picks up a little. There are no impulses in sight from the end markets.

PP: Trading started on a sour note for European PP producers in August, with demand in a deep summer trough. It took until mid-month for demand to liven up somewhat, when spot notations simultaneously firmed. At this point, producers were happy to see polymer prices roll over at the propylene reference level. The compounding market segment was quiet. As the two reference points showed no change, July prices here, too, rolled over without much ado. The propylene reference contract for September dipped by EUR 50/t. At the moment, it doesn´t look as if demand will be strong enough to allow producers to pocket any of their price relief. As compound prices are tied to indices, they will without doubt come down.

PVC: European PVC producers seemed unconvinced that they would be able to push through demands for the pro-rata increase in costs in August and agreed to a rollover. One producer was not prepared to waive a EUR 5/t increase. Slight increases and reductions were seen here and there, depending on the price for the previous month. Notations on the UK market rose due to currency translation effects. Additives remained neutral overall. Only plasticiser prices were still under pressure. Order activity in September is eagerly anticipated. The hope is that a seasonal upturn will come about in the same way as last year and that the PVC market will be largely spared the economic slowdown. At all events, reductions ought to be feasible given the weaker cost side.

Styrenics: In Western Europe, styrenics prices are continuing on a roller coaster ride. After two months of declines, notations trended up in August 2019, following the SM contract, although plastics producers were often unable to transfer the full SM cost increase to the market. Demand was weak due to the economic downturn and summer holidays. Prices will continue to go up in September as the SM contract has risen EUR 59/t. Producers could insist on transferring the costs in full, especially since processors´ demand is likely to pick up when the holiday season ends. The economic environment continues to have a dampening effect. Should it become apparent in September that notations will drop, many processors will not buy more materials than necessary.

PET: The pressure on European PET prices continued in August. After a hot start, the weather remained mixed for too long for demand to pick up more. Many processors were left sitting on fully stocked warehouses. Transactions were concluded at highly differing prices, however. The greater the volume purchased, the more prepared suppliers were to make concessions. Small volumes were more often settled at a rollover. Freely negotiated monthly purchases fluctuated between price reductions of around EUR 30/t and stability. The PX reference for August was settled at a late stage at EUR 40/t lower. Demand ought to pick up, especially as the Mediterranean holiday period is coming to an end. Whether this will stabilise the situation is anyone´s guess, given the global trade disruptions that keep flaring up, although inexpensive imports are on offer.

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