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Bullish expectations lose steam for PS, PVC, PP in Europe; PE languishes

  • 27/02/2018 (09:07)
After February deals have been mostly concluded higher in Europe, players have started to voice their March expectations. The bullish outlook seems to have lost some steam mainly due to weaker upstream costs and fading demand.

As for the PS market, March expectations are calling for rollovers to increases of up to €50/ton in both styrene and PS prices despite the ongoing styrene shutdowns across the globe, after three-digit hikes were reflected on PS deals in February.

February demand was not spectacular given the fact that the extent of the February hikes deterred some buyers from purchasing. Plus, PS buyers had previously secured their needs in January to avoid paying strong hikes in February. High stock levels on part of the buyers will make it easier for them to remain on the sidelines next month.

Confirming that bullish expectations for March have cooled off during the month, a PS distributor said, “We heard expectations about rollovers to increases of €30-40/ton for March.” A buyer also said, “We didn’t purchase in February as we are waiting for a price relief in April. As for March, we hope that lower crude oil prices and the weaker US dollar may keep the awaited increases for PS in check.”

The PVC market, meanwhile, is balanced in terms of supply-demand. February business was wrapped up with small hikes of €10-15/ton after sellers initially sought increases of up to €40/ton. Regardless of a possibly stable to lower outcome of ethylene contracts, sellers are mulling over applying another round of small increases in March, pointing to their need to recover margins.

“We have bought some extra stocks as we believe that PVC sellers will seek €5-10/ton increases for March, defying the outcome of the ethylene contracts,” noted a buyer from the Netherlands. A Central European producer said, “Improving demand might encourage PVC sellers to try renewed hikes for March in the midst of regular supplies. However, PVC prices may remain flat if ethylene settles with rollovers.”

In the PP market, production issues paved the way for larger increases in monthly deals across Europe. The same factor is likely to render a relatively stronger outlook for March PP prices with respect to other polymers. However, weaker upstream costs may put a cap on the expected hikes driven by the output issues in Europe, players argue.

When it comes to PE, prices are widely expected to track a stable to soft path given weak demand and the lack of supply issues. After closing February deals with rollovers to some increases of €20/ton, buyers decided to take a waiting stance given softer March expectations.

A reseller from Italy reported that overall demand is slow while demand for LLDPE c4 film is weaker. He added, “If demand does not show a pick-up, PE prices will be rolled over. Our expectations are calling for stabilization in March as we believe that prices cannot go below the current levels.”

A distributor in the Netherlands, meanwhile, commented, “As for March, we expect rollovers to €10-20/ton decreases in PE prices as the market might not support any further hikes especially if ethylene settles at a rollover. It may even settle with some decreases.”

Nevertheless, there are also some players arguing that suppliers might initially seek for small increases despite weak demand as naphtha prices have recently shown some rebound in sync with the rising crude futures.
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