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April 2017 Are we approaching a new era in polymer pricing? 0845 34 54 560 www.plastribution.co.uk
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April 2017 - Plastribution€¦ · Acetone Styrene Cumene Ethylbenene ABS PMMA SBR DPE, DPE, DPE MO Olefins Methane Dehydrogenation Crude Oil aptha Aromatics oluene Benene Cylclohexene

Apr 30, 2020

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

    0845 34 54 560www.plastribution.co.uk

  • 2www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer 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: report@plastribution.co.ukPolymer 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 CylclohexeneAdipic 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: report@plastribution.co.ukPolymer 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

    Feedstock

    •Oil

    •Gas

    •Shale

    •Naptha

  • 5www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer 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: report@plastribution.co.ukPolymer 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

    Au

    g -

    08

    De

    c -

    08

    Ap

    r -

    09

    Au

    g -

    09

    De

    c -

    09

    Ap

    r - 1

    0

    Au

    g -

    10

    De

    c -

    10

    Ap

    r - 1

    1

    Au

    g -

    11

    De

    c -

    11

    Ap

    r - 1

    2

    Au

    g -

    12

    De

    c -

    12

    Ap

    r - 1

    3

    Au

    g -

    13

    De

    c -

    13

    Ap

    r - 1

    4

    Au

    g -

    14

    De

    c -

    14

    Ap

    r - 1

    5

    Au

    g -

    15

    De

    c -

    15

    Ap

    r - 1

    6

    Au

    g -

    16

    De

    c -

    16

  • 7www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer and feedstock price data provided by PIE. www.pieweb.com

    Polyolefins

    LDPEProducers 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 PIEwww.pieweb.com

    LLDPEProducers 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-over in to April, and although conditions of tight supply are reported to continue, there seems sufficient supply to meet demand. There are rumours of increased cargoes of traded product and caution regarding the future market trend.

    HDPEAs with the other Polyethylene product families, producers applied increases in excess of the March feedstock settlement, citing tight supply. However, there generally seemed sufficient product to meet demand and there were signs that the market was becoming long.

    Prices have rolled-over in to April in line with the C2 settlement. Availability seems more than sufficient to meet demand, and there are signs that market prices will come under pressure in the months ahead.

    PPTight supply of Propylene feedstock was responsible for a€€50/T increase in C3 settlement in March. This led to increases of at least this amount for Polypropylene, with some producers increasing by as much as €100/T. A number of producers reported production issues, some with Force Majeures in place. However, despite issues from particular suppliers, generally supply seemed sufficient to meet demand.

    C3 moved forward by a further €15/T in April and this has been passed on to polymer prices. Some producers have increased further, again citing tight supply, but generally the market seems balanced and once full capacity returns, it is likely prices will come under pressure.

    Other PolyolefinsEVA pricing is following the feedstock settlements. In March, increases of at least the €30/T Ethylene feedstock settlement were applied. For April, prices are likely to rollover. Demand and supply seem largely in balance. There are rumours of increased Vinyl Acetate monomer prices, which could affect EVA pricing levels. However, the expectation is that Ethylene prices could reduce in the months ahead.

    Supply Supply Supply Supply

    Demand Demand Demand Demand

    £1,360.00

    £1,160.00

    £960.00

    £760.00

    £560.00

    £360.00

    £160.00

    £ p

    er t

    onn

    e

    Brent Crude

    Naphtha Spot

    Ethylene (C2) Spot

    Ethylene (C2) Contract

    Propylene (C3) Spot

    Propylene (C3) Contract

    Polyolefin Basket

    Ma

    r - 1

    6

    Ap

    r - 1

    6

    Ma

    y -

    16

    Jun

    - 1

    6

    Jul -

    16

    Au

    g -

    16

    Sep

    t -

    16

    Oc

    t -

    16

    No

    v -1

    6

    De

    c -

    16

    Jan

    - 1

    7

    Feb

    - 1

    7

    Ma

    r- 1

    7

    £1,360.00

    £1,160.00

    £960.00

    £760.00

    £560.00

    £360.00

    £160.00

    £ p

    er t

    onn

    e

    Brent Crude

    Naphtha Spot

    Ethylene (C2) Spot

    Ethylene (C2) Contract

    Propylene (C3) Spot

    Propylene (C3) Contract

    Polyolefin Basket

    Ma

    r - 1

    6

    Ap

    r - 1

    6

    Ma

    y -

    16

    Jun

    - 1

    6

    Jul -

    16

    Au

    g -

    16

    Sep

    t -

    16

    Oc

    t -

    16

    No

    v -1

    6

    De

    c -

    16

    Jan

    - 1

    7

    Feb

    - 1

    7

    Ma

    r- 1

    7

  • 8www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer and feedstock price data provided by PIE. www.pieweb.com

    Styrenics

    PSAs expected, March delivered a €90/T increase, pushing PS to an all-time high. PS supply tightened as producers throttled to avoid stock build up, and converters resisted buying any more material than was necessary.

    April has seen SM crash downwards by €275/T, but it is unlikely this drop will be realised in full, as suppliers will argue the full increases were not passed on during the price rises. Demand is likely to increase, as converters start to refill inventory, and popular grades could be in short supply.

    Data provided by PIEwww.pieweb.com

    ABSMarch saw hikes of SM + €90/T, and BD + €350/T. Despite concerns that increased demand at the end February could lead to some producers selling out early, supply and demand remained balanced. The expectation of falling prices in April saw demand contract at the end of the month.

    April brought an end to the upwards trend on ABS, with SM dropping €275T, and BD - €300. As with PS, it is unlikely producers will pass this on in full, but reductions are inevitable. With Asian import grades, the lower prices will take a while to filter through, and supply will be tight as suppliers avoid purchasing any more than necessary at the peak of the market.

    PC/ABSAs usual, PC/ABS is following the trend of ABS.

    Other StyrenicsSAN and specialities such as ASA and SMMA continue to follow the price trend of Styrene monomers.

    Supply Supply Supply

    Demand Demand Demand

    Brent Crude

    Benzene Spot

    Benzene Contract

    Styrene (SM) Spot

    Styrene (SM) Contract

    Styrene Basket

    £ p

    er t

    onn

    e

    £1,960.00

    £1,760.00

    £1,560.00

    £1,360.00

    £1,160.00

    £960.00

    £760.00

    £560.00

    £360.00

    £160.00

    Ap

    r - 1

    6

    Ma

    y -

    16

    Jun

    - 1

    6

    Jul -

    16

    Au

    g -

    16

    Sep

    t -

    16

    Oc

    t -

    16

    No

    v -

    16

    De

    c -

    16

    Jan

    - 1

    7

    Feb

    - 1

    7

    Ma

    r - 1

    7

    Brent Crude

    Benzene Spot

    Benzene Contract

    Styrene (SM) Spot

    Styrene (SM) Contract

    Styrene Basket

    £ p

    er t

    onn

    e

    £1,960.00

    £1,760.00

    £1,560.00

    £1,360.00

    £1,160.00

    £960.00

    £760.00

    £560.00

    £360.00

    £160.00

    Ap

    r - 1

    6

    Ma

    y -

    16

    Jun

    - 1

    6

    Jul -

    16

    Au

    g -

    16

    Sep

    t -

    16

    Oc

    t -

    16

    No

    v -

    16

    De

    c -

    16

    Jan

    - 1

    7

    Feb

    - 1

    7

    Ma

    r - 1

    7

  • 9www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer and feedstock price data provided by PIE. www.pieweb.com

    Engineering Polymers

    PA6Significant increases have been seen in the first quarter and further increases are expected for April. Caprolactam is reported as extremely tight and lead-times are extending for most suppliers. Demand from the automotive sector is still strong and further driven by an upward trend. There is little evidence of any improvement in the short to medium term.

    Data provided by PIEwww.pieweb.com

    PA66Feedstocks are still playing a major part in further increases. The predicted shortages in February and March became a reality. European adipic acid prices are still being pulled upwards as demand appears to exceed supply.

    POMSome suppliers have taken the decision to push through rises on the back of methanol increases in Asia. There are likely to be no significant changes to supply and demand at present.

    PCBenzene has started to decline, settling at - €192/MT against the previous month. Despite feedstocks easing, suppliers continue to increase prices to recoup costs that they haven’t already been able to claim thus far. Demand in the automotive sector remains high and the priority is to secure volumes, aiding the suppliers with their calls for further increases.

    PMMAMMA is in very short supply and as such many producers have pushed through significant price increases for quarter two. Further dramatic hikes are expected into quarter three. Demand remains strong, particularly in automotive sector.

    PBT/PETModerate increases in comparison to other polymers. Supply and demand appear to be fairly balanced, although there are reports of a tightening of the European PBT market.

    Supply Supply Supply Supply Supply SupplyDemand Demand Demand Demand Demand Demand

    Brent Crude

    Benzene Spot (EUR/t)

    Benzene Contract(EUR/t)

    Naphtha Spot (EUR/t)

    Engineering Basket

    £3,500.00

    £3,000.00

    £2,500.00

    £2,000.00

    £1,500.00

    £1,000.00

    £500.00

    £0.00

    £ p

    er t

    onn

    e

    Feb

    - 1

    5

    Ap

    r - 1

    5

    Jun

    - 1

    5

    Au

    g -

    15

    Oc

    t -

    15

    De

    c -

    15

    Feb

    - 1

    6

    Ap

    r - 1

    6

    Jun

    - 1

    6

    Au

    g -

    16

    Oc

    t -

    16

    De

    c -

    16

    Feb

    - 1

    7

    Brent Crude

    Benzene Spot (EUR/t)

    Benzene Contract(EUR/t)

    Naphtha Spot (EUR/t)

    Engineering Basket

    £3,500.00

    £3,000.00

    £2,500.00

    £2,000.00

    £1,500.00

    £1,000.00

    £500.00

    £0.00

    £ p

    er t

    onn

    e

    Feb

    - 1

    5

    Ap

    r - 1

    5

    Jun

    - 1

    5

    Au

    g -

    15

    Oc

    t -

    15

    De

    c -

    15

    Feb

    - 1

    6

    Ap

    r - 1

    6

    Jun

    - 1

    6

    Au

    g -

    16

    Oc

    t -

    16

    De

    c -

    16

    Feb

    - 1

    7

  • 10www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer and feedstock price data provided by PIE. www.pieweb.com

    Engineering PolymersData provided by PIEwww.pieweb.com

    Brent Crude

    Benzene Spot (EUR/t)

    Benzene Contract(EUR/t)

    Naphtha Spot (EUR/t)

    Engineering Basket

    £3,500.00

    £3,000.00

    £2,500.00

    £2,000.00

    £1,500.00

    £1,000.00

    £500.00

    £0.00

    £ p

    er t

    onn

    e

    Feb

    - 1

    5

    Ap

    r - 1

    5

    Jun

    - 1

    5

    Au

    g -

    15

    Oc

    t -

    15

    De

    c -

    15

    Feb

    - 1

    6

    Ap

    r - 1

    6

    Jun

    - 1

    6

    Au

    g -

    16

    Oc

    t -

    16

    De

    c -

    16

    Feb

    - 1

    7

    Brent Crude

    Benzene Spot (EUR/t)

    Benzene Contract(EUR/t)

    Naphtha Spot (EUR/t)

    Engineering Basket

    £3,500.00

    £3,000.00

    £2,500.00

    £2,000.00

    £1,500.00

    £1,000.00

    £500.00

    £0.00

    £ p

    er t

    onn

    e

    Feb

    - 1

    5

    Ap

    r - 1

    5

    Jun

    - 1

    5

    Au

    g -

    15

    Oc

    t -

    15

    De

    c -

    15

    Feb

    - 1

    6

    Ap

    r - 1

    6

    Jun

    - 1

    6

    Au

    g -

    16

    Oc

    t -

    16

    De

    c -

    16

    Feb

    - 1

    7

    Other Engineering PolymersThe situation for most other engineering polymers points towards further increases in line with rising feedstock costs.

    PBT/PETModerate increases in comparison to other polymers. Supply and demand appear to be fairly

    balanced, although there are reports of a tightening of the European PBT market.

    Supply

    Demand

  • 11www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: report@plastribution.co.ukPolymer and feedstock price data provided by PIE. www.pieweb.com

    FundamentalsTopic Item Date % Trend

    GDP Real GDP (Q on Q) Q4 2016 0.0

    GDP Real GDP (Y on Y) Q4 2016 0.4

    UK Output Manufacturing (M on M) Jan -0.9

    UK Output Manufacturing (Y on Y) Jan 2.7

    Sales New Car Registrations (Y on Y) Feb -0.3

    Sales Retail Sales (M on M) Feb 1.5

    Labour Unemployment Rate Jan 4.7

    Prices CPI (Y on Y) Feb 2.3

    Prices RPI (Y on Y) Feb 3.2

    Interest Rate Bank of England Base Rate Mar 0.25

    1. Oil Price

    Oil prices have firmed on the back of an OPEC deal to curb production, and $50 (£300 per tonne) per barrel appears to be a fairly stable base.

    2. Exchange Rates

    The Sterling/Euro exchange rate is a key factor in determining polymer prices, since most materials are Euro denominated. At current price levels, each Euro Cent change in price represents a £10 per tonne impact on our polyolefins materials basket. The Sterling/USD exchange rate tends to be more influential on the price of ABS, PC and POM.

    The UK Brexit vote resulted in a significant revaluation of the GBP against both the Euro and USD. There is little expectation of recovery given the uncertainty facing the UK economy.

    UK Economic DataBrent Crude Oil Price per tonne

    Exchange Rates

    USD per tonne GBP per tonne

    500.00

    450.00

    400.00

    350.00

    300.00

    250.00

    200.00

    150.00

    Ap

    r - 1

    6

    Jun

    - 1

    6

    Au

    g -

    16

    Oc

    t -

    16

    De

    c -

    16

    Feb

    - 1

    7

    Ap

    r - 1

    6

    Ma

    y -

    16

    Jun

    e -

    16

    July

    - 1

    6

    Au

    g -

    16

    Sep

    t -1

    6

    Oc

    t -

    16

    No

    v -

    16

    De

    c -

    16

    Jan

    - 1

    7

    Feb

    - 1

    7

    Ma

    r - 1

    7

    1.45

    1.40

    1.35

    1.30

    1.25

    1.20

    1.15

    1.10

    1.05

    GBP vs Euro

    GBP vs USD

    Euro vs USD

  • This report is produced based upon the following fundamentals: -

    • EURObasedpricingforfeedstockand polymer pricing

    • ConversionofEuroandUSDbasedprices at prevailing exchange rates

    • ProductbasketsweightedaccordingtoUKconsumption

    AcknowledgementsWe would like to thank the following organisations for their support in producing this report: -

    PIE (Plastics Information Europe) www.pieweb.com

    HM Treasury www.hm-treasury.gov.uk

    DisclaimersThe information provided in this report are based upon data available from both external an internal sources, and whilst care is exercised in producing this report we give no guarantee of accuracy.

    Furthermore we accept no liability for purchasing decisions based upon the information provided as the petrochemical market is complex and volatile.

    © Plastribution Limited. All rights reserved. 2017

    Plastribution LimitedClinitron House, Excelsior Road, Ashby Business Park, Ashby-de-la-Zouch, LeicestershireLE65 1JG

    Tel: +44 (0) 1530 560560Fax: +44 (0) 1530 560303

    Email: sales@plastribution.co.ukwww.plastribution.co.uk

    Methodology

    Welcome to price know-howFrom Hydrocarbons to PolymerMain drivers of polymer pricesknow-how hubAre we approaching a new era in polymer pricing?PolyolefinsStyrenicsEngineeringPolymersFundamentalsMethodology