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April 2017 - · PDF file Acetone Styrene Cumene Ethylbenene ABS PMMA SBR DPE, DPE, DPE MO Olefins Methane Dehydrogenation Crude Oil aptha Aromatics oluene Benene Cylclohexene Adipic

Apr 30, 2020

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  • April 2017 Are we approaching a new era in polymer pricing?

    0845 34 54 560 www.plastribution.co.uk

  • 2www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] Polymer and feedstock price data provided by PIE. www.pieweb.com

    Welcome to price know-how

    A monthly publication looking at key factors that affects UK polymer markets.

    Price Know-how Glossary

    The concept of a user friendly market report came from feedback about an article published in PRW (Plastics & Rubber Weekly) about the 2011 market outlook to which Plastribution made a significant contribution.

    Whilst some price surveys currently exist they are often difficult to interpret, use foreign currencies, and differing units of measure. Price know-how aims to be relevant by providing an overview, material group specific reports and more general economic information including exchange rates and GDP growth. To keep things relevant the report is in £ Sterling with tonnes as the common unit of measure.

    The objective of the report is to form the basis of discussion about issues such as pricing and availability and so be a basis on which to consider purchasing strategies.

    It is also believed that the report will support customers in explaining polymer price trends to their own customers, employees and shareholders.

    As always we would welcome your feedback, and as ever your sales team is available to discuss your specific requirements.

    The Plastribution Team

    Monomers

    C2 – Ethylene

    C3 – Propylene

    SM – Styrene Monomer

    Naphtha

    Derivative from the crude oil refining process, which is then

    typically passed through a (Steam) Cracker to produce various

    feedstocks including C2 and C3.

    Force Majeure (non-legal definition)

    Since accepting an order circumstances outside of the

    supplier’s control, and which could not have been foreseen,

    now prevent the supplier from fulfilling the contract either in part

    or in full. By declaring Force Majeure the contract is to supply is

    cancelled.

  • 3www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] Polymer and feedstock price data provided by PIE. www.pieweb.com

    Coal Methanol Formaldehyde Acetal

    Polyethylene

    Polypropylene

    Polystyrene

    Phenol

    Acetone

    Styrene

    Cumene

    Ethylbenzene

    ABS

    PMMA

    SBR

    LDPE, HDPE, LLDPE

    MTO

    Olefins

    Dehydrogenation Methane

    Crude Oil Naptha Aromatics Toluene

    Benzene Cylclohexene Adipic Acid Nylon 66

    Nylon 6Caprolactam

    Xylenes

    Ethane

    Propane

    Butane

    Condensate

    Ethylene (C2)

    Propylene (C3)

    Butadiene (C4)

    Butene

    Natural Gas

    Steam Cracking

    From Hydrocarbons to Polymer

    A simple diagram explaining the production routes from the major hydrocarbon sources through feedstock to the most common polymer groups.

  • 4www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] Polymer and feedstock price data provided by PIE. www.pieweb.com

    •Political •War •Natural Disaster

    •Changes in consumer markets

    •Geographical shifts

    in supply/demand

    External Factors •Currency•Short term demand•Short term reductions in capacity•Arbitrage of Polymer•China & SE Asia supply/demand•Trader Activity

    Market•Monomer Pricing Styrene Propylene Ethylene Benzene C4

    Polymer Producers

    Main drivers of polymer prices

    •Polymerisation Margins •Inventory •Planned & un-planned outages

    Feed stock

    •Oil

    •Gas

    •Sha le

    •Nap tha

  • 5www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] Polymer and feedstock price data provided by PIE. www.pieweb.com

    The know-how hub allows us to offer tailored content that will be constantly evolving, thereby providing subscribers with a high value opportunity to access a wealth of useful information.

    Mike Boswell, Managing Director, Plastribution

    Plastribution has recently released a new online content library known as the ‘know-how hub’.

    The resource, which is free to access via our website (www.plastribution.co.uk/know-how-hub), is a registration-based source of premium content containing insights, opinion, market intelligence and innovation.

  • 6www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] Polymer and feedstock price data provided by PIE. www.pieweb.com

    According to the trade body Petrochemicals Europe, an amazing 95% of manufactured goods are dependent upon the use of petrochemicals, of which plastics and polymers are a significant part. Whilst many are neither aware nor perhaps willing to accept such reliance, it appears the producers of these materials are, for the time- being at least, able to optimise the economics of this reliance. In fact, many of the oil producing companies with downstream petrochemical operations are for once enjoying more significant returns on these assets as the price of petrochemicals remains high in comparison to the predominate raw material of crude oil.

    However, the world of petrochemicals, and in turn plastics and polymers, is complex and inevitably a range of factors are always at play. But, and as this title suggests, perhaps the world of plastics pricing is about to change from a market where prices are feedstock led, more towards a market where supply-demand balance, even within traditional polymer groupings, may become a model of the past. The graph below depicts the increasing margin for polyolefins:

    Whilst this demonstrates an average trend to greater producer margins, it is becoming increasingly evident that there are price differentials opening up even within material groups such as PE, whereby not only are changes taking place between LLDPE and the increasingly scarce LDPE, but even with LDPE, price premiums for the rarer products such as injection moulding grades are becoming increasingly evident.

    It looks like a similar situation is arising in the arena of engineering polymers. Here the increase in benzene and methanol pricing has been a catalyst for polymer price increases. Now it appears that supply-demand balance for polymer groups, and within that particular grades, is likely to become the new driver of price. For many, the announcement of force majeure affecting Nylon 6 production will bring back bad memories from 2015 and will act as a further stimulus for sustained price increases.

    For the processors and users of plastic products, it may be difficult to view this situation as good news, as the challenge will be to pass price inflation down through the supply chain. However, for the industry as a whole, which is dependent upon the petrochemical producers for almost all its raw material, the improved economics should lead to a more sustainable business.

    As always, the future in this sector looks interesting!

    Are we approaching a new era in polymer pricing?

    Monomer Prices (£ GBP per tonne)

    Feedstock Change (Contract)

    C2 (Ethylene) £0.00

    C3 (Propylene) £12.64

    Styrene -£231.73

    Benzene -£161.76

    Brent Crude £42.38

    Brent Crude

    Polyolefins Basket

    1.4

    1.2

    1

    0.8

    0.6

    0.4

    0.2

    0

    A u

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    0 8

    D e

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    0 8

    A p

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    09

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    A p

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    1 2

    D e

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    A p

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    3

    A u

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    A p

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    6

    A u

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    1 6

  • 7www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] Polymer and feedstock price data provided by PIE. www.pieweb.com

    Polyolefins

    LDPE Producers announced increases of at least the €30/T increase in Ethylene in March. Some producers announced additional increases, citing tight supply. This certainly appeared to be the case initially, but as the month progressed availability seemed to return and there seemed sufficient product to meet demand.

    Feedstock costs rolled-over into April and most producers followed this trend. Whilst some producers continue to report tight supply, in general, availability seems balanced.

    Data provided by PIE www.pieweb.com

    LLDPE Producers announced increases in excess of the €€30/T C2 feedstock settlement in March as conditions of tight supply continued. C4 LLDPE for film seemed particularly tight, affected by limited cargos of traded product.

    Prices have rolled-ov

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