Plastribution’s Polymer Price Know-How: March 2024
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Plastribution’s March Polymer Price Know-How highlights how Houthi disruptions in the Red Sea briefly affected European PE and PP supplies. Despite these challenges, converters are managed through existing inventories and local sourcing, mitigating immediate impacts. However, logistical and production constraints have tightened supply, pushing LDPE prices up, and underscoring the need for strategic procurement amidst volatile market conditions.
The effects on polymer supply resulting from the Houthi terrorist attacks on shipping in the Red Sea appear to have been short-lived, with converters either able to call upon their inventories or able to purchase from local supply sources to cover the delays in shipments from Asia and the Middle East, as many shipping lines adopt the longer Cape of Good Hope route to Western Europe.
However, pricing remains a contentious issue as materials shipped via the Cape of Good Hope have incurred a significant cost premium which polymer suppliers are looking to pass through to customers; here producers cite limited availability as justification for significant price hikes with LDPE supply being very tight.
Polymer Production outages in Western Europe are another important factor with a series of force majeures impacting upon local polymer supply. Furthermore, US PE and PP markets continue to firm on the back of strong export demand, which may, at least in part, be a result of the Red Sea shipping delays.
The contrast between the Aromatic and Olefin feedstock cost increases is marked. The more modest C2 and C3 settlements and the late settlement of the C2 contracts likely reflect protracted negotiations resulting from the increasing delta between Naphtha/Crude Oil pricing and the weaker price of Natural Gas, which is a competing feedstock.
Any shortage of supply in Europe still appears to be transitory, as other regions of the world continue to look well supplied. This leaves polymer converters facing a dilemma in their purchasing strategies to cover short-term requirements whilst at the same time mitigating the risk of ending up with over-priced inventory. In this regard, it does feel like the current tight market conditions may be transitory.
The further fall from the peak in the Drewry World Container Index for eight major east-west trades appears to be well established and makes good sense in terms of the Red Sea situation being a smaller-scale issue than the shipping challenges created by the global COVID-19 pandemic.
A number of styrenic and engineering polymer producers have started to announce increases for materials including ABS, PMMA and POM and such moves are likely to at least eliminate the lowest prices present in the market.
Monomer Price Movement
Exchange Rates
€- 1.16
$- 1.27
€/$- 1.09
Polyolefins
Polyolefin prices rose strongly in February as the market saw a sudden shift in sentiment as the Red Sea shipping disruption impacted availability. Monomers saw modest increases of €5 / MT for C2 and Ethylene and €15 / MT for C3 Propylene, but these are largely irrelevant this month save for those in monomer-linked contracts. All PE and PP grades saw significant increases of at least €150 / MT with some grades (LDPE) increasing by €200-250 / MT as demand significantly outstripped the immediate availability.
Buyers who had become used to readily available materials found themselves scrabbling for supply and the prices reflected this as producers and traders saw an opportunity to restore the margins lost towards the end of 2023.
These levels are likely to be relatively short-lived as we are still in a global oversupply situation. Depending on who you ask, we are likely to see a return to January levels sometime between March and May as supply chains adapt and availability matches demand again.
Styrenics
Further Hikes for Contract Styrene, Polymer prices Follow.
Styrene Monomer has risen again, settling at €1777/T, an increase of €222/T from February.
For March, EU GPPS and HIPS followed, with EU ABS showing similar rises. Deep sea materials are showing an increase, albeit not as strong. Prices are expected to remain high until May at the earliest.
GPPS/HIPS/ABS supply chains are still running very low. Polymer producers have been running output at a minimum due to poor demand, and converters and distributors running inventory at very low levels due to financial pressures. Therefore, any adjustments in polymer prices are likely to be passed on immediately.
Engineering Polymers
Prices are starting to increase for most engineering materials as raw material costs rise, and we continue to feel the impact of vessels being redirected away from the Red Sea causing longer lead times.
The Benzene contract for March rose by a further €214/mt to €1231/mt, which was a similar rise to February.
Sustainable Polymers
Most recycled materials have seen increases in February on the back of some very strong increases in Prime prices. Whilst +€150 / MT is out of the question, increases of €30-80 / MT have been reported as buyers unable to secure prime stocks looked for alternatives.
Recycled LDPE / LLDPE
Recycled LDPE / LLDPE has seen strong increases in February as Prime grades rose to levels not seen since the start of 2023. Good quality recycled material now became an option for those struggling to secure prime LDPE.
Recycled HDPE
Recycled HDPE also saw increases though perhaps not as strongly as LDPE/LLDPE. Colourable, higher-quality grades suitable for blow moulding of personal care packaging saw stronger increases compared to black grades.
Recycled PP
Recycled PP rose by around €50 / MT as buyers looked for alternatives to either increasingly expensive or simply not available prime grades. Colourable grades were perhaps above this with black compounds possibly a bit below.
Price Know-How: March 2024 Full Report
Visit the Price Know-How website to read the March 2024 update, which details each market segment and material group produced by Plastribution’s expert product managers.
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Price Know-How, a decade-long trusted resource in the industry, provides essential updates on polymer pricing and market dynamics. This report is crafted by Plastribution, a leading polymer distributor, in collaboration with Plastics Information Europe.
Price Know-How is tailored specifically for the UK polymer industry, unlike many other price reports. They do all the currency conversions, so you don’t need to!
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