PVC prices fell in line with the proportionate cost reduction last month.

In July, European standard thermoplastic prices headed downward despite a slight firming in most feedstock costs. Polymer markets were well supplied with material from European production lines and imported material, which had been attracted by the previous high price levels.

LDPE prices fell by €60/tonne with the more over-supplied LLDPE grades down by €70/tonne. This compares with a €10/tonne rise in the July ethylene contract price. As a result of the significant price cuts PE nominal margins over ethylene fell to less than €500/tonne, a level last seen in April 2015.

L/LDPE producers attempted to stabilise the market in August but had to concede further discounts slightly ahead of the €20/tonne reduction in the ethylene contract price.

Similarly, HDPE producers had to offer substantial price cuts in July due to growing over-supply. Blown film prices fell on average by €50/tonne with blow moulding and injection moulding prices down €25-30/tonne. HDPE prices continued to fall in August, but at a slower pace.

PP producers were also forced to concede price rebates in July despite a €17.5/tonne increase in the propylene contract price. There was ample material available and demand remained lacklustre. Homopolymer injection prices fell €30/tonne with copolymer injection down €20/tonne and homopolymer film down €10/tonne. PP prices stabilised last month following a rollover in the propylene contract price.

PVC margins also saw margin erosion in July as prices rolled over despite a €5/tonne proportionate cost increase. PVC prices fell in line with the proportionate cost reduction last month.

Polystyrene prices plunged in July in line with the €125/tonne reduction in the styrene monomer reference price as a result of an abundant supply of material, but stabilised last month.

PET prices slipped by €20-30/tonne during July and August due to wide availability of imported material and disappointing demand.

In July, several of the scheduled and unscheduled plant turnarounds came to an end with most cracker and polymer plants running at high operating rates. The French plants of Total, for example, which were affected by a strike in late May and early June were moving back toward normal production levels. As a result, material availability swelled, particularly for the polyethylene sector. Imports from the US and Asia also played a role.

Material availability was less abundant in August as local producers curbed production rates to reduce excess stock levels. Furthermore, a number of European plant maintenance turnarounds are planned during the summer holiday period. In addition, some Asian facilities are undergoing routine maintenance. This means lower import volumes from the US arriving in Europe.

The latest supply-related developments are summarised below:

A planned maintenance shutdown of one of BPRP's two crackers at Gelsenkirchen, Germany, will begin mid-August.LyondellBasell is set to carry out scheduled maintenance at one of its crackers at Wesseling, Germany, in September.Versalis has restarted its Ragusa site in Sicily and has lifted force majeure for its Pharmalene and Riblene LDPE production in Ferrara, Italy.

Converters had been adopting a wait-and-see approach during the early summer period, but seized the opportunity to top-up their inventories as prices plunged in July. There were even reports that some producers closed their order books early August to deter any further pre-buying. Nevertheless, demand continued at a reasonable level for the beginning of the holiday season.

As polymer markets move closer into balance, the September price trend will be driven primarily by feedstock cost developments.

Read the full report here.