Issue 03 – October 2012
price
£1,350.00 £1,150.00 price £950.00 £750.00 Polyolefins
Data provided by PIE
www.pieweb.com
Supply Demand LDPE
After the very strong buying activity in July, August business has been conducted in a more orderly fashion. Supply has improved due to lower demand particularly from Southern European countries where many processors shut down for their summer vacation.
Again order books are being closed early and it is expected that the market will again become very tight towards the end of the month as buyers look to secure increased volumes for September.
Supply Demand LLDPE
As with LDPE seasonal factors have taken some of the heat out of the LLDPE market, but again activity looks set to increase at the end of the month, and given the anticipated short supply of LDPE many buyers will look to substitute LLDPE to cover any shortfall.
£550.00 £350.00 £150.00
Brent Crude Naphtha Spot Ethylene (C2) Spot Ethylene (C2) Contract Propylene (C3) Spot Propylene (C3) Contract Polyolefin Basket
Supply Demand HDPE
Despite the seasonal drop in demand the market remains well balanced.
Some producers who are undergoing maintenance shutdowns, or who have experienced unplanned outages are struggling to meet demands following the strong demand in July that depleted inventories.
Supply Demand
PP Producer inventories have been significantly reduced since the strong period of demand in July.
Due to this pre-buying demand from converters has been pretty average, but given the likely short supply of propylene in September as a number of European Naptha Crackers undergo planned maintenance shutdowns.
Other Polyolefins EVA succumbed to a combination of feedstock price reductions and pressure from buyers, and price concessions have resulted.
mPE producers will look to take advantage of the LLDPE shortage of supply, and processors will, where possible, take advantage of the higher performance of these grades to offset increases through down-gauging and increased operating rates.
Plastomers continue to follow the monomer price trend.
www.plastribution.co.uk
Tel: +44 (0) 1530 560560
Email:
report@plastribution.co.uk
Polymer and feedstock price data provided by PIE.
www.pieweb.com
5
Will crude oil prices sustain the upward price trend on polyolefins and how soon will other materials be affected?
price Feedstock Costs
1500 1400 1300 1200 1100 1000 900 800 700 600
Fundamentals
Naphtha Spot Ethylene (C2) Spot Ethylene (C2) Contract Propylene (C3) Spot Propylene (C3) Contract Benzene Spot Benzene Contract Styrene (SM) Spot Styrene (SM) Contract
UK Economic Data Brent Crude Oil Price per tonne
300.00 400.00 500.00 600.00 700.00 800.00 900.00 1,000.00
300.00 400.00 500.00 600.00 700.00 800.00 900.00 1,000.00
Topic GDP GDP
USD per tonne GBP per tonne
USD per tonne GBP per tonne
UK Output UK Output Sales Sales
Labour Prices Prices
Interest Rate
As you will read in the following commentary, in many cases polymer prices have increased dramatically if not considerable pressure is mounting to increase prices in order to increase or restore margins.
Since the 2008 crash it is evident that producers are extremely capable of reducing output to balance with demand and hence ensure that margins can be maintained even in a global recession.
Monomer Prices (£ GBP per tonne) Data provided by PIE
www.pieweb.com
Feedstock
C2 (Ethylene) C3 (Propylene) Styrene Benzene
Brent Crude
Change (Contract) £110.61 £102.71 -£90.86 £85.33 £43.20
1.80
Exchange Rates 1.80
1.70 1.60
1.70 1.60
1.40 1.50
1.20 1.30
1.10 1.00
1.40 1.50
1.20 1.30
1.10 1.00
Euro USD
Euro USD
Item
Real GDP (Q on Q) Real GDP (Y on Y)
Manufacturing (M on M) Manufacturing (Y on Y)
New Car Registrations (Y on Y) Retail Sales (M on M) Unemployment Rate CPI (Y on Y) RPI (YoY)
Bank of England Base Rate
In GBP terms oil prices have fallen quite significantly, until the end of June, but in the since the beginning of July prices have rallied (see introduction). Subject to this trend on oil prices continuing there will be pressure for price increases across the whole spectrum of petrochemical products including polymers.
The Sterling / Euro exchange rate is a key factor in determining polymer prices, since most materials are Euro denominated. At current price level each Euro Cent change in prices represents a £10 per tonne impact on our polyolefins materials basket.
Date
Q1 2012 Q1 2012 Apr Apr
June June May June June Aug
%
-0.3 -0.2 -0.9 -1.8 4.8 0.1 8.1 2.4 2.8 0.5
The Sterling / USD exchange rate tends to be more influential on the price of ABS, PC and POM with significant imports from Asia and Euro weakness is placing pressure on raw material imports such as crude oil into the Eurozone, and is making sales to Asia look relatively more attractive.
Whilst weak Stirling increases competiveness of exports from the UK it also causes inflation on imported goods including plastic raw materials. Sterling has weaken against the dollar and strengthened against the Euro. At the same time the Euro has remained weak against the dollar. Given that both crude oil and feedstocks are priced in dollars this is also an inflationary pressure on polymer pricing.
Trend
www.plastribution.co.uk
Tel: +44 (0) 1530 560560
Email:
report@plastribution.co.uk
Polymer and feedstock price data provided by PIE.
www.pieweb.com
4
www.plastribution.co.uk
Tel: +44 (0) 1530 560560
Email:
report@plastribution.co.uk
Polymer and feedstock price data provided by PIE.
www.pieweb.com
9
39
£ per tonne
Sep – 11 Oct – 11 Nov – 11 Dec – 11 Jan – 12 Feb – 12 Mar – 12 Apr – 12 May – 12 Jun – 12 Jul – 12 Aug – 12
£ per tonne
Sep – 09 Dec – 09 Mar – 10 Jun – 10 Sep – 10 Dec – 10 Mar – 11 Jun – 11 Sep – 11 Dec – 11 Mar – 12 Jun – 12
Sep - 09 Nov - 09 Jan - 10 Mar - 10 May - 10 Jul - 10 Sep - 10 Nov - 10 Jan - 11 Mar - 11 May - 11 Jul - 11 Sep - 11 Nov - 11 Jan - 12 Mar - 12 May - 12 Jul - 12
Sep - 09 Nov - 09 Jan - 10 Mar - 10 May - 10 Jul - 10 Sep - 10 Nov - 10 Jan - 11 Mar - 11 May - 11 Jul - 11 Sep - 11 Nov - 11 Jan - 12 Mar - 12 May - 12 Jul - 12
Jul – 10 Sep –10 Nov – 10 Jan – 11 Mar – 11 May – 11 Jul – 11 Sep – 11 Nov – 11 Jan – 12 Mar – 12 May – 12 Jul – 12
Jul – 10 Sep –10 Nov – 10 Jan – 11 Mar – 11 May – 11 Jul – 11 Sep – 11 Nov – 11 Jan – 12 Mar – 12 May – 12 Jul – 12
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