Europe’s polymer markets open Oct with drops; PVC defies the odds

Regional polymer markets started the month on a bearish note, influenced by weak economic conditions, easing supply levels and lower feedstock costs. However, PVC bucked the broader trend in the market, with fresh offers emerging with rollovers to slight increases from September.

Derivative sectors, ranging from packaging to construction, have been grappling with reduced demand amid economic factors that have curtailed manufacturing, leading to accumulating resin stocks on the sellers’ side. Europe’s polymer markets seem to be unfazed by the recent spikes in energy prices triggered by the escalating tensions in the Middle East, although a prevailing sense of caution persists. Although PVC is widely used in the construction sector to make pipes and window frames as well as in various consumer goods, its surprising resilience can be attributed to the margin recovery attempts that have been keeping the momentum tilted to the upside for the past couple of months.

Will PVC plateau in Oct?

PVC prices in Europe experienced a third consecutive monthly increase in September, defying unsupportive costs and supply-demand dynamics. This upward trend was largely driven by suppliers’ efforts to recover margins, as profitability remained a pressing concern in the region. Despite ethylene contracts settling at lower levels, suppliers are pursuing further price hikes this month, attempting to secure the increases they were unable to achieve in the previous month.

While suppliers remain committed to their profitability targets, the month is far from over. Buyers express skepticism regarding small hike requests, citing poor derivative markets and ample supplies. In fact, converters have already started to report rollovers on deals given the increasingly bearish conditions at play. Imports particularly from Asia may gain competitiveness, if freight rates continue to slide. Yet, they think that there is no room for visible drops in the days to come at least for West European origins as margins are far from the positive territory.

Polyolefin markets under pressure from import origins

Regional PP and PE markets have fallen for the second straight month in October as the emergence of competitive import origins served as a catalyst to reinforce the bearish momentum, let alone lower monomer settlements and lethargic post-summer demand.

Although suppliers initially tried to put a cap on the downtrend, PP producers had to apply larger decreases than that of propylene. Decreases of €50/ton were reported for European material, while import origins saw deeper price cuts. Aggressive import offers for various origins put pressure on spot ranges, with PPH prices from Canada hitting as low as €1100/ton FD level. Supply levels are deemed comfortable despite regional production outages, which is due in part to the weakness in derivative markets.

When it comes to PE, a lack of competitive import offers from the US was counterbalanced by weak demand. Meanwhile, imports from nearby sources found their way to the bloc considering unpromising sales results across the board. Purchasing volumes remained limited as buyers were either covered or skipped purchases amid softer voices. This coupled with lower ethylene settlement pushed October PE prices lower, with decreases of up to €50/ton seen depending on the grade. Non-European LDPE prices broke below the €1200/ton FD level this week.

PET downturn deepens on low season

A confluence of factors including low season and weaker costs pushed PET prices to their year-to-date lows. Expectations for further weakening during October and subdued order entries towards the year-end contributed to the downfall, let alone a lack of supply concerns.

Indeed, imports have been improving in tandem with the falling freight rates. However, the gap between the spot and import markets has not been wide enough to entice sales. If the downturn halts in the import markets amid firmer energy prices, this may prop up spot levels to some extent inside Europe.

Styrenics plummet following styrene’s correction

Both PS and ABS prices witnessed steep declines this month after closing September on a stable to softer note. It was no surprise to see styrenics markets plummet by three-digits following the €202/ton drop in the monthly styrene settlement. Despite unsupportive supply-demand dynamics, some suppliers tried to keep decreases in check to improve profitability. A producer source said, “No room for further PS drops as our margins are at break-even point.”

On the other hand, converters expect to receive further discounts on deals, if demand conditions stay subdued. Nonetheless, some sellers hope that hefty drops will spur demand as they do not rule out a rebound in the benzene and styrene markets following firming crude and naphtha prices.