Raw material costs drive resin prices higher in Europe

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LLDPE and LDPE producers imposed further exorbitant price hikes in April due to rising raw material and energy costs. Following the €230/tonne increase in the contract price of ethylene, L/LDPE producers called for price increases of €250-300/tonne, depending on suppliers’ production levels and the extent in which an energy surcharge was passed on in the previous period. month. In April, L/LDPE transactions resulted in an increase of €200 to €250/tonne compared to the previous month.

Production remained at normal levels and suppliers were in most cases able to meet their contractual obligations. The uncertainty caused by the war in Ukraine coupled with very high prices dampened demand. Some processors have even extended the Easter holiday due to high prices and uncertain prospects.

In May, L/LDPE prices fell by nearly the €50/tonne reduction in the contract price of ethylene in the first week of trading.

HDPE
In April, high-density PE producers demanded a significant price increase of €300/tonne due to rising energy costs and a €230/tonne increase in the contract price of ethylene . However, producers settled for price increases of around €200/tonne for most standard grade materials due to weak sales. The very high price level has deterred many processors from ordering more material than necessary.

There were few production issues affecting HDPE plants in April and there was enough material available to meet demand. While the spring plant maintenance season is about to be in full swing, supply should tighten up in the coming months.

In May, HDPE prices fell by around €40-50/tonne in the first week of trading due to the €70/tonne reduction in ethylene, increased imports into Europe and low demand.

polypropylene
In April, PP producers reacted to the €225/tonne rise in propylene costs by calling for a €300-350/tonne price increase to cover both rising raw material and fuel costs. ‘energy. The PP sector has also been confused by gas supply prospects following the Russian-Ukrainian war. However, by the end of the month, PP prices had increased in line with the cost of monomers.

Buyers balked at the exorbitant prices sought at the start of the month and refused to negotiate. By mid-month, however, buyer interest rebounded as PP producers reluctantly retreated from their initial price position. On the supply side, there was enough material to meet demand, although the upcoming mill maintenance season is expected to reduce availability.

Declines of around €100/tonne were reported in early May trading following the €70/tonne drop in propylene costs.

PVC
In April, PVC producers announced major planned price increases ranging from €185/tonne to €250/tonne. This reflects an energy surcharge, as well as the pass-through of 50% ethylene costs, which increased by €230/tonne. Basic PVC resin prices increased by €200/tonne at the end of April.

Regional PVC supply remained weak due to several planned and unplanned plant shutdowns. Imports from Asia have also declined due to production restrictions resulting from the Chinese government’s zero COVID policy.

Record price levels are dampening demand. Processors find it difficult to pass on high energy prices to most of their customers and only purchase additional equipment to meet their immediate needs.

PVC prices finally fell for the first time since mid-2020 in early May trading. Basic PVC prices fell €30-35/tonne as lower demand offset tighter availability.

PS
PS prices reached a new record high in April, surpassing the previous record set in May 2021. Producers announced planned price increases between €415 and €430/tonne. Most of the increase comes from a €360/tonne increase in the April styrene monomer reference price settlement and the rest from an energy surcharge. For April as a whole, PS prices rose slightly more than the rise in raw material costs.

Material availability has tightened due to production issues and reduced PS production. Demand weakened in April due to exorbitant prices, the Easter holiday and the shortening of the working month. Many processors are struggling to pass on the higher costs to end users and are reducing their purchases.

This month, PS producers announced planned price increases of €90-120/tonne after the cost of styrene monomer increased by a further €84/tonne.

ANIMALS
In April, the bottle-grade PET price spike began to subside with only modest gains of around €10/tonne.

While supply remained tight in April due to maintenance shutdowns at factories in southern Europe, there was a slight loosening of material availability elsewhere. Imports from the Fast East declined as European buyers shunned Chinese materials due to ongoing logistics backlogs and late shipping times.

The war in Ukraine casts a shadow over normal expectations of a seasonal recovery in demand for PET bottles. Converters are limiting their purchases of polymers to the bare minimum and continue to have difficulty passing on cost increases to their customers.

This month, PET prices are expected to decline following a rollover in April’s paraxylene benchmark price and lower monoethylene glycol (MEG) costs.

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