All products rise despite stagnating costs / Market tight due to poor supply and normal demand / Monomer-plus-margin strategy drives calls for hikes

In July, the increasingly tight market situation lent momentum to European standard thermoplastics' drive to push prices forward by as much as EUR 50/t at the beginning of Q3, despite largely stagnating monomer costs. Initially, converters were able to limit the extent of the hikes. However, the further tightening supply played into producers' hands. The size of the July increases varied considerably as the market situation evolved. By August, the PIE ranges for LDPE, LLDPE and HDPE had risen by up to EUR 45/t, while tightness in PP moved the range upward by EUR 15/t. S-PVC base material climbed EUR 17.50/t. Even if styrenics were already expensive, the PIE range for PS added a further EUR 12.50/t. The increase for EPS was held to EUR 5/t, and was confined to insulation grade.

Early in the month, numerous unexpected restrictions in feedstock supply - which inevitably had a limiting effect on polymerisation activities - led some producers to refuse orders beyond the initially forecast volumes. With output of PE, PP and PVC diminished, the supply picture worsened.

Both seasonal influences and special price effects helped to fill the order books, and demand for most polymer types and grades was normal, despite many businesses taking their usual summer break.

Due in part to the mini rally upstream and the tight supply, monomer contract prices that been moving sideways for nearly three months increased in August. Ethylene (C2) was up EUR 40/t, propylene (C3) up EUR 50/t and styrene up EUR 47/t. Even though order volumes normally decline in August, producers intend to do more than just recoup their higher production costs this month. Accordingly, the first announcements of price hikes for August also contain a margin-improving component.

For PE, producers are targeting around EUR 100/t more, while PP producers are looking for EUR 70/t more. S-PVC base material suppliers want an extra EUR 50/t, while PS and EPS producers also will push for substantial increases. As supply will surely remain tight, price rises could certainly exceed production cost increases, even if this is unusual for the peak summer holiday month.

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