Polymer Price Know-How: September 2022

The latest installment of Price Know-How has been released by the leading polymer distributor, Plastribution. Price Know-How helps plastic raw material buyers make informed purchasing decisions. This month, huge price falls, including benzene which has fallen by an incredible £830 per tonne. However, the price may prove good news for plastics converters facing rising energy bills. 

Overview: September 2022

Polymer producers attempt to restrict price reductions and take action to choke output.

A further crash in aromatic feedstocks, including benzene and SM styrene monomer, was accompanied by a more significant than expected reduction in the price of C2 ethylene and C3 propylene olefin feedstock for September. Over the past two months, the cost of SM has fallen by over £660 per tonne and benzene by an incredible £830 per tonne.

In the case of polypropylene and polyethylene, producers make valiant attempts not to pass through the reduction in monomer prices, citing the need to restore margins in a situation where it is difficult even to cover variable costs.

In addition to official announcements of cutbacks to output rates, many producers are expected to limit production rates to restore the supply/demand balance in their favour. This has been witnessed before in previous economic crises such as 2008 (Banking Crisis) and 2020 (Covid-19 Pandemic) when the situation of oversupply was corrected within a reasonably short period.

The massive reduction in benzene feedstock will impact both styrenic polymers and a range of engineering polymers. This is an essential aromatic hydrocarbon compound, which is the basis for the following intermediates:

Of which ethylbenzene, cumene, and cyclohexane are precursors to essential monomers, including SM (styrene-based polymers), Bisphenol A (PC), and HMXDA (PA66).

While the more traditional polymers markets such as PS, ABS, and SAN are likely to react similarly to polyolefins, engineering polymers tend not only to be influenced by input costs but also are heavily influenced by the global economic situation, and this is likely to apply firm downward pressure. However, this will take some time to filter through to market prices.

For many plastics converters, the timing of the fall in polymer prices may prove to be most fortuitous as most face a massive cost increase in the form of higher energy bills.

Polyolefins

Pricing in September continued the downward trend of recent months, hitting new lows not seen for 18 months.

Both C2 and C3 monomers dropped significantly due to weak downstream demand. C2 ethylene descended by €120 / MT, and C3 propylene decreased by €165 / MT. In many cases, these falls were reflected in new September pricing. Virtually all polyolefin grades continue to be in an oversupply situation, and even with output cuts by all major producers, the market is still very long. It remains to be seen if the market picks up sufficiently in September following summer shutdowns in Europe to return some balance to the market.

Prices at these levels are unsustainable, with a negative gap from monomers to polymers. Spot homopolymer is €1,225 / MT compared to €1,230 / MT for Propylene.

With energy costs soaring for producers, difficult decisions will need to be made in the coming months as to whether shutting down an asset is less damaging than selling at significant losses.

Some possible signs of recovery with reports from markets beyond Europe of a pickup in activity are hoped that we are at the bottom of this pricing cycle correction. However, with global economies still anticipating challenges, it remains to be seen if we’re seeing recovery or just a stop to the current downward trajectory.

Styrenics

Engineering Polymer Feedstocks

Price Know-How: September 2022 Full Report

Visit the Price Know-How website to read the September 2022 update, including an in-depth analysis of each market segment and material group by Plastributions expert product managers.

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Price Know-How is an industry-leading report to keep you updated on polymer pricing and market fluctuations. A trusted, go-to resource for over a decade, Price Know-how is produced by the thermoplastics experts at the leading polymer distributor, Plastribution, with data from Plastics Information Europe.

Unlike many pricing reports, Price Know-How is tailored specifically for the UK polymer industry. We do all the currency conversions, so you don’t need to!

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