Higher March monomer contracts fail to revive demand in Europe

March propylene contracts settled €55/ton higher on the back of the higher naphtha costs as well as the €50/ton increase in the spot market observed during February. There were also ongoing concerns about supply constraints stemming from several cracker turnarounds in the region. Ethylene contracts also settled up €50/ton from February due to the firmer spot naphtha prices. Plus, spot ethylene prices gained €30/ton during the course of February and triggered the rise in the contract price. Looking at the styrene market, March contracts settled with a €27/ton increase as the upstream benzene contracts for March settled also with increases of €14/ton from February. However, the spot styrene market softened by $10/ton during February given the $30/ton softening on the spot benzene market.

Higher monomer settlements coupled with supply constraints in Europe give an upper hand to sellers to raise their polymer prices but weak demand, which higher monomer contracts failed to revive, still persists in the market. Buyers in Italy appear to be adamant to pay only small hikes while sellers are insisting on obtaining at least the monomer contract hikes.

In the PP market, a distributor in Italy commented, “Our supplier issued the same increase amount as the propylene contract at €55/ton but due to the weak demand they revised down their hike request to €40/ton. However, for the PE market, we are seeking the same amount of increase that the monomer contracts recorded.”

A South European producer asks for €60/ton hikes for their homo-PP and PP block copolymer injection offers from their February levels. “We lifted our prices slightly higher than the monomer contract’s rise given our limited supplies,” a source at the producer further added.

A compound maker noted, “We received €70/ton higher PP prices from February levels but our supplier told us that they are open to negotiations and therefore, we prefer to wait until the second half of the month since we expect to see lower prices by then.”

In the PVC market, a trader offering on behalf of a West European PVC producer commented, “We are selling our supplier’s materials with €50/ton hikes over February but we are likely to close our deals with €20-30/ton hikes by the end of the month. Our supplier holds very limited cargoes due to their shutdown which will end by end-March. This means we will have restricted supplies until April.”

A trader who offered Central European PVC with a €30/ton hike at the beginning of March revised down their hike target by €10/ton on the back of the persistently weak demand. “We have been selling PVC with increases since February and now it gets harder to convince buyers to pay large hike amounts,” he remarked.

A distributor commented, “Our Central East European supplier is asking for €30-40/ton increases on their March PVC prices. However, we struggle to conclude deals amidst thin demand at these high levels and therefore, we are willing to offer discounts. Yet, our supplier appears adamant to achieve their full increase target.”

In the PE market, sellers are seeking increases in a wide range. The hike requests change between €10-60/ton when compared with February levels. Some producers aimed to obtain the full extent of the monomer contract hikes while some, considering the thin buying interest, are asking for smaller increases.

A packaging converter noted, “We are planning to keep our stock at minimum levels as we do not see good end product demand from our customers.”

A distributer added, “A West European producer stepped back from their initial March hike target of €100/ton to €70/ton. We think if the supplier does not see encouraging demand at their newly revised levels they may opt to lower their operating rates.”

In the PS market, sellers are asking rollovers to up to €20/ton increases on their spot transactions, below the €27/ton hike in the March styrene contract in order to be able to entice better buying interest amidst slow demand.

A distributor commented, “We are asking €20/ton increases for March although our West European supplier is officially aiming for €40/ton increases. We do not want to push away our customers since we already struggle to achieve deals. March has started on a slow note in terms of buying interest and we already lost some possible deal connections as some other sellers were offering at more competitive prices.” The distributor expects to close their March business by the third week of the month since it will be a shot month due to the Easter holiday.

A buyer received €15-20/ton higher PS offers when compared to February levels and added that he is still evaluating these offers as he hopes to see lower prices in the days ahead since overall demand is not good enough to support increases.