Prices plunge on weak demand and lower feedstock costs

LLDPE
In August, LDPE and LLDPE prices both fell by €120/tonne, which was significantly more than the decline of €70/tonne in the cost of ethylene. Material continued to be well supplied while demand from various end use sectors continued to disappoint. 
Demand was lower than would normally be expected during a summer holiday period amid growing economic uncertainty and the squeeze on consumer purchasing power. Converters mostly tended to work from stocks and purchase only to meet their immediate production needs.
While there was sufficient material available to meet the slack demand, production cutbacks and maintenance turnarounds kept a lid on supply. Imports from the Middle East and Asia were also widely available.
Prices are falling in September, although less than expected as producers’ factor in rising energy costs. The September ethylene contract price settled €120/tonne lower.

HDPE
In August, HDPE price reductions once again far exceeded the €70/tonne decline in the ethylene reference price with settlements for all types down by €120-130/tonne compared to the previous month.
HDPE production has been cut back by less than other PE materials and a good local supply was supplemented by a steady stream of imported material.
Demand was far less than would normally be expected during the summer. The automotive and building & construction sectors, were in particular, reluctant to buy amid growing fear of recession.
In September, HDPE prices are falling by less than was originally expected. Producers appear to have retained a proportion of the €120/tonne reduction in ethylene cost to compensate for rising energy prices. European HDPE producers have stepped up production cutbacks, but supply is supplemented by a steady stream of imported material.

PP
PP prices also fell much further than the €85/tonne reduction for the propylene reference price in August due to weak demand and abundant supply. Homopolymer injection moulding and homopolymer film prices fell by €120/tonne and copolymer injection prices were €100/tonne lower.
Demand has slowed down noticeably over the summer as converters become more wary of the likely impact of a recession.
There was more than sufficient ,material available to the European market despite production cutbacks and production outages. There was also a plentiful choice of lower-priced imp[orts.
PP prices fell further during the first two weeks of September after the propylene reference price settled €165/tonne lower. Demand shows no sign of a recovery amid growing fear of a recession. While producers have made further production cutbacks to prevent a build-up of stocks, availability remains well supported by imports.

PVC
In August, base PVC prices fell by around €65-70/tonne, which far exceeded the proportionate €35/tonne reduction in PVC production costs from the €70/tonne fall in the cost of ethylene. PVC flexible and rigid compound prices fell by slightly less than base PVC prices as a result of lower additive costs.
Market demand was lower than would normally be expected during the summer as fear of a recession grew. Converters bought just enough material to cover their immediate production needs.
While compounders reduced production in response to the low demand, there was more than enough material available from local producers and from imports.
PVC base resin and PVC compound prices fell again during the first half of September. High stocks at producers, competitively-priced imports and low demand are piling further downward pressure on European PVC prices. 

PS
The styrene monomer reference price plummeted by a record €509/tonne in August, largely the result of a crash in benzene. Producers initially targeted a price rebate of €400/tonne, but very weak demand meant that producers had to concede rebates of €450-500/tonne.
PS demand was weaker than would normally be expected during the summer. The wide price differential between PS and PP continues to encourage material substitution while the fear of recession grows.
PS producers have implemented production cutbacks in view of the weak demand while import volumes remain quite low.
PS prices have again fallen sharply during the first two weeks of September after benzene and ethylene contract prices settled much lower. Material availability remains under control with production cuts in place and imports remaining low. There were few signs of a significant upturn in demand by mid-month.

PET
In August, PET buyers were looking for price relief following a reduction of €95/tonne to the July paraxylene and MEG contract prices. Accordingly, PET prices slumped by up to €200/tonne due to an abundant supply and disappointing sales.
PET demand remained rather sluggish last month despite the hot summer weather and drought conditions in many parts of Europe. Converters preferred to draw down stocks in anticipation of further sharp price rebates.
Supply was more than sufficient to meet the low demand, despite production cutbacks. There was also a growing volume of very competitively-priced imports from Asia and the Middle East due to an easing in freight costs.
PET prices are falling further in September following a decline in feedstock costs, low demand and the ongoing pressure from imports. Elevated utility costs may however check the PET price reduction.