Polyamides and POM remain chronically short, while the other materials were for the most part adequately available. The basic fact remains, however, that special grades are still subject to long delivery times as a result of the serious shortage of fillers and functional additives.
Demand in January remained very robust, in particular from the automotive sector.
The rocketing benzene price took another EUR 122/t leap in February. Overall, in the first two months of 2011, this key feedstock has gone up by as much as EUR 271/t, equivalent to a rise of about 37%. It is obvious that this will have significant repercussions in all downstream segments. Producers are thus seeking at least triple-digit increases – calling for as much as EUR 350/t for standard grades. Prices for the even more expensive speciality grades are only quoted on request. Since imports continue to be few and far between and with demand stable at a high level, the main issue now is the size of the respective increase and not whether there will be an increase at all. Unfortunately, there is no end in sight to this upward flight.
At the end of January, Dutch company Momentive resumed production of the direct PC feedstock bisphenol A (BPA). Its plant had had to be unexpectedly idled in mid-December.
In Asia, various annual maintenance turnarounds for caprolactam have been scheduled in Q1, most of them expected to last several weeks. Aside from Asian maintenance turnarounds, three European players will also carry out works at their plants in Q2.
Whereas North American adipic acid production plants will close for maintenance in February, those in Europe will shut up shop in June and August.
The situation for individual polymers in January 2011 was as follows (research conducted in the 4th calendar week):
Producers began the year by calling for increases of EUR 100-130/t. This unusual jump in prices for a January was justified by the approximately 8% hike in the ABS cost mix compared with December. Styrene monomer alone, which accounts for 50% of the mix, rose by an average of EUR 126/t. Butadiene, which represents around 20%, added about EUR 60/t over December, while January’s first contract for acrylonitrile (ACN, accounting for 25%) was up EUR 120/t. The united approach by the producers resulted in an overall rise in the ABS portfolio of EUR 120/t. Imports were discouraged by the euro’s unfavourable exchange rate throughout much of January. When they did materialise, imports were sometimes more expensive than the European material.
Supply: Balanced. Suppliers were usually able to meet demand for the natural grade without any unusual delays. Delivery times for the coloured materials, on the other hand, still amount to about six weeks. With no end in sight to the global shortage of titanium dioxide, producers are still quoting delivery times of 14 weeks for the white/black product. There was no sign of any unusual imports.
Demand: Normal. Although the month was riddled with bank holidays, producers said ordering activity was relatively good ordering for a January. It could have been even better had some projects not been cancelled due to the high feedstock prices, one converter told PIE. In extreme cases, processors even took their moulding tools to competitors.
Outlook for February: Producers want to lift ABS notations by another notch, announcing hikes of up to EUR 150/t. The global benzene hype also pushed European contract notation for February up by another EUR 122/t. All in all, this key feedstock has already jumped by a staggering EUR 271/t since the beginning of the year. The styrene contract (SM) for February followed suit, rising by an average of EUR 96/t. Even though it plays a less important role in the ABS cost mix, the EUR 100/t jump in February’s butadiene contract is no less dramatic. Although by press time no contract had yet been fixed for ACN, spot market notations indicate a further increase in the making, as Asian price levels are now almost on a par with those in Europe. With no scheduled interruptions for western European ABS output in the cards in February, producers should be able to meet the consistently high demand, at least for standard material. Nevertheless, there are signs that not all will be smooth sailing when it comes to the future supply situation. In Asia – the world’s largest production region for butadiene – several plants will undergo maintenance turnarounds in March and thus be at a standstill, a development bound to have a negative effect on global availability. Apart from that, depending on the particular process, Europe’s styrene facilities are operating at lower rates for economic reasons or have been switched off altogether for maintenance. Despite a few bottlenecks upstream, the overall order book situation for ABS still looks very good. On the back of strong demand, producers should be able to factor in their higher costs in full.
As feared, producers' calls for increases of up to EUR 300/t received a considerable boost from the EUR 149/t leap in January’s benzene contract. Initially, this significant rise in the cost of the key aromatic was mirrored by phenol. These increases in turn pushed PC notations in the distribution range up by around EUR 150/t. There were also reports of producers winning the full EUR 300/t from direct purchases, where prices tend to be lower and remain in force for a longer period. Distributors will inevitably take this into account in the monthly agreements up to the end of Q1.
Supply: Balanced to good. The classic "top-up month" saw demand rise significantly not only in western Europe, but also in Asia. Although most western European production capacities were operating normally, standard grades were still subject to delivery times of four to five weeks. As soon as additives entered the fray, delivery times lengthened to eight weeks and more. Additional orders were either rejected point blank or allocated for some time in the future. Imports played no role whatsoever.
Demand: Normal to good. Ordering activity was liveliest in the automotive sector, but E&E was also quite sprightly. Business in the building and consumer goods segments was described as "OK".
Outlook for February: The global hype over benzene inevitably cast a shadow over February contract negotiations in Europe. By the time the talks were wrapped up, the key feedstock had added another EUR 122/t, which translates into a cumulative hike of EUR 271/t so far this quarter. Market insiders expect that phenol will mirror this leap, as it usually does. Although producers had not submitted any additional requests for price increases by the time this report went to press, they left no doubt whatsoever about their intention to factor in what was still left of their targeted increases at the beginning of Q1. On the supply side, there are reports that Momentive resumed production of the direct PC feedstock bisphenol A (BPA) at the end of January. The plant had had to be switched off unexpectedly in mid-December. By now, demand is no longer driven solely by European car manufacturers, as Asian customers are also vying for European PC. Coupled with a rise in costs, the consistently strong demand will put mounting pressure on prices again, which converters will have a hard time resisting.
Immediately after the rise of EUR 149/t in January’s benzene contract was made known, producers of virgin polyamide 6.6 resin (the base material of compounds) hiked the prices for their compounding customers and non-integrated PA manufacturers by EUR 150/t. At the same time, market insiders were surprised at the new heights taken by caprolactam, which followed the benzene trend and added EUR 150/t. Southern European PA producers immediately responded to this rapid succession of events by calling for increases of up to EUR 150/t for ready-to-use compounds. Other producers thought they had done enough during the lengthy negotiations at the end of last year to secure the increases they wanted, not imagining that feedstocks would rise again so sharply and so quickly. One major producer emphasised that any further campaigns to raise prices for ready-to-use compounds in the direct business should be carefully weighed. Overall, the distribution range responded to the many different initiatives by climbing by EUR 70/t.
Supply: Balanced to tight. Producers of ready-to-use compounds were working flat out. For some standard materials, delivery times have lengthened to up to 12 weeks. More specialised grades containing additives can take as long as 20 weeks to reach their buyer. The feedstock supply bottleneck caused by the brief shutdown of caprolactam production at DSM in The Netherlands and the ongoing FM for caprolactam at Honeywell in North America continues to worsen. Basically, not all producers were able to meet demand for virgin polyamide and compounds in full.
Demand: Normal to good. Hardly had converters returned from their Christmas/New Year holidays than they were inundated by further big orders from their automotive customers. Other segments, such as E&E, took a little longer to some back to life. Asia, on the other hand, was wide awake, and even though the Chinese were celebrating their new year at the beginning of February, they had previously submitted a whole bookful of orders for speciality grades.
Outlook for February: Nominally, February’s benzene contract rose by another EUR 122/t, which means this key feedstock has already added EUR 271/t since the beginning of the year. While other producers in north-western Europe were still undecided as to what price strategy to adopt, shortly before press time one Dutch producer laid his cards firmly on the table and called for increases in the order of EUR 200/t in addition to the rise he had failed to win in the final quarter of last year. The main reasons cited were the significant increases in the costs of benzene, caprolactam and additives, including glass fibres and flame retardants. In the near future, the supply situation will no longer depend on the occasional "plant hiccup". A far more urgent question is how long producers will show reverence to the global shortage of feedstocks such as benzene, caprolactam and even virgin polyamide and to the netbacks beckoning from elsewhere. The anti-dumping duties imposed by China could leave one or two scars in their wake. Nevertheless, the planned maintenance schedules in Asia, covering a nominal capacity of around 300,000 t/y in Q1, do not exactly leave one feeling confident. In Q2, the cycle will cover two Asian and three European plants with a total output of around 600,00 t/y. In view of this, the well above-average order call-offs by one car manufacturer in particular are causing considerable headache. The overwhelming desire to secure volumes is driving converters to strange activities like hoarding. Despite the usual calls by OEMs for price reductions for their supplied parts, converters will presumably have to swallow further price rises. The continuing cost explosion with engineering thermoplastics is making the converters' dilemma worse every week.
Producers of virgin polyamide 6.6 resin (the base material of compounds) successfully passed on EUR 100/t of the EUR 149/t rise in the cost of benzene to their compounding customers and non-integrated PA manufacturers. As far as ready-to-use compounds are concerned, producers brought the last particularly low-priced customers in the direct business up to the normal level. In southern Europe, producers responded immediately to the feedstock increases by announcing hikes of EUR 150/t. As a result, distributors also became more courageous and succeeded in passing on at least a good part of the costs imposed on them by winning increases of up to EUR 120/t.
Supply: Tight. Rhodia is still in FM. The tanker accident that brought shipping on the Rhine to a standstill also threw back the production of adipic acid in Chalampé / France, which had previously been making good progress. There is little prospect of any short-term improvement. The other PA 6.6 producers delivered "normally" wherever possible – at least within the framework of the forecasts. Capacity utilisation is extremely high and demand is rising constantly, producers told PIE. Delivery times are now negotiated in months rather than weeks, with three months currently the norm.
Demand: Normal to good. Following the events on the Rhine, the battle for volumes flared up again. "Everyone is on the lookout for material in some way or other," one distributor told PIE.
Outlook for February: February’s benzene contract rose by EUR 122/t, meaning it has risen by a cumulative total of EUR 271/t during Q1 so far. Shortly before this newsletter went to print, a Dutch producer decided not to beat about the bush any longer, announcing increases in the order of EUR 200/t on top of the demands still open from Q4 2010. The reason behind the calls: The drastic increases in the cost of benzene and the EUR 80/t rise in the cost of adipic acid, not to mention the cost explosion with additives, glass fibres and flame retardants. On the other hand, one or two producers also seem to be sending out conciliatory signals. One of them reportedly told customers that the price peak for PA 6.6 had "gradually been reached". In the second half of the year, he said, the direction was likely to change and notations would come down again. Nevertheless, the short-term supply situation remains tense in view of the consistently high demand. In February, Invista will carry out its annual maintenance turnaround for adipic acid (350,000 t/y) in North America, while a European producer will perform maintenance work on the adipic acid plants at two different sites (150,000 t/y capacity) in June and August. For the time being, prices therefore continue to point upward.
At the beginning of the year, the Q1 notations for 1.3 butadiene diol (BDO) rose by an average of EUR 75/t compared with the contract price for Q4/2010. PX was up EUR 90/t. Dimethyl terephthalate (DMT) opened the bidding in the first month of the new year with a rise of EUR 70/t. As 2010 drew to a close, producers already had announced increases of between EUR 150/t and EUR 250/t for basic PBT, and up to EUR 400/t for flame-retardant material. Whereas many long-term contracts did indeed contain considerable increases for direct purchases, the campaign hit a brick wall with distributors when it reached EUR 120/t. Depending on the filler content, in fact, the hike in some cases amounted to little more than EUR 100/t.
Supply: Balanced to good. In most cases, production plants were operating normally although producers were again often unable to supply key E&E customers with sufficient flame-retardant material. There was no sign of any imports to ease the situation.
Demand: Normal to good. There were reports that a large European electrical company had to halt production for a week due to a lack of raw materials at one of its own plastics suppliers. Once again, automotive proved to be the main driver, followed by white goods and teletronics.
Outlook for February: The initial successes of the price hikes have only partly compensated for the loss of margins suffered by producers last year. The latest cost increases for the polyester feedstocks – in February, the price of PX rose by EUR 110/t, translating into a cumulative total increase of EUR 200/t in Q1 – have once again left producers with little option but to act. Shortly before this issue went to print, one producer set the ball rolling by announcing a hike of EUR 350/t as soon as the PX contract became known. Speciality grades could rise even more, it was said. More than ever, the ability to meet the mounting demand will depend on the availability of the respective fillers, additives and pigments. In line with the pressure on margins, producers will probably close ranks and seek at minimum to recoup their increased costs. Given the rise in demand, converters will probably not be able to do much about it.
In the first month of the new year, producers initially seemed reluctant to make any calls for further increases. However, rumours of an upcoming round of price talks began to gradually take shape as the month progressed. The occasional moves to close the gaps from last year's rounds of price negotiations did not, however, do much to change the stable level that has prevailed since October.
Supply: Very tight. The annual spate of maintenance turnarounds last autumn resulted in major restart problems for one producer and, as Plasteurope.com was told last month, output only really returned to normal in the new year. However, as a result of these long-lasting restrictions, there is a considerable backlog of orders to work off, further limiting flexibility. This means that some form of volume allocation is inevitable. Prices in Asia are high and the euro’s weak performance during much of January did little to encourage traders to seek unusual import initiatives.
Demand: Normal. Following the rather weak beginning to the month due to bank holidays, ordering activity picked up considerably from one week to the next. Having concluded their stock-taking, converters began filling up their inventories again. In view of the imminent changes to the supply of copolymer material, they were particularly keen to order frequently used standard grades in larger quantities.
Outlook for February: Rumours of significant price increases abounded at the beginning of February, and it seemed as though the initiators first wanted to test the waters. Then they put it in writing, asking for an additional EUR 200/t. Other producers will inevitably jump on the bandwagon, market insiders say. On the other side of the fence, converters are trying their best to encourage each other, given the fact that the material they need is coming in at no more than a trickle. "Once Ticona's new POM plant is up and running, we will have enough high-grade raw material." Until then, however, they will have to climb almost insurmountable price hurdles. At least with copolymer POM, substantial increases are almost certain to be imposed.
There was considerable indecisiveness among producers at the beginning of the year as to what action they should take. One large producer shied away from hiking prices, while others chose the opposite path. Many of them already had announced increases of up to EUR 230/t at the end of last year, based on the increase in the cost of methylmethacrylate (MMA) feedstock, which has gained EUR 170/t over the two quarters of Q4 2010 and Q1 2011. Producers initially focused on the particularly low prices at the bottom end of the table but then moved on to the distributors. By the end of January, notations were on average EUR 40/t above the December figure.
Supply: Tight to balanced. Although ordering was slower due to the bank holidays and the weaker demand from Asia, producers decided to keep their production plants running at full throttle to make up for the few remaining shortages. Any surpluses – wherever they did occur – were allocated to the buffer stocks.
Demand: Normal. Despite the slightly poorer demand from Asia, order volumes significantly exceeded those of January 2010. The main reason for this was that many suppliers to the automotive industry continued production over the holiday period almost without a break.
Outlook for February: Producers will continue in their efforts to secure the increases they announced at the beginning of the year, and will be very insistent when it comes to negotiating longer-term prices. The first Q1 agreements have been fixed significantly higher, and the actions of some retailers in buying up considerable volumes on speculation despite the high prices is a further indication that notations are likely to rise. At present, Asian prices are higher than those in Europe. Because monitor production in Asia was cut back in Q4, the PMMA supply situation eased slightly in Europe. With the end of Chinese New Year in sight, demand is expected to rise enormously as soon as everyone returns to work. Because of the automotive sector’s steady rise in demand, any buffer stocks that have been built up will quickly melt away again. Depending on the duration of the contracts, the price increase could be quite considerable.
Producers of standard PP kicked off 2011 by calling for hikes of EUR 100-120/t. They justified this significant increase by the rise of EUR 110/t in January’s propylene contract (C3). PP compounders followed suit and called for an extra EUR 120/t. By the end of the month, notations in the freely negotiated segment showed rises averaging EUR 90/t, with even higher prices for materials containing additives. Indexed orders naturally rose by the same amount as the monomer.
Supply: Balanced to good. After the bank holidays, compounding units resumed normal operations. Given the previous production cutbacks, delivery times for flame-retardant and glass fibre-reinforced grades once again lengthened. Overall, demand in January 2011 significantly exceeded that of the same month last year.
Demand: Normal. Any reservations regarding the now high-priced material had to be quickly overcome in view of the sudden influx of orders from the automotive sector.
Outlook for February: With the renewed rise of EUR 35/t in February’s propylene contract, the PP feedstock has reached an all-time high of EUR 1,105/t. While producers of standard PP have already called for hikes of up to EUR 50/t, compounders are emphasising that much of their targeted January increase also still remains open. With indexed orders, the rises will automatically follow the monomer. On the supply side, the monomer feedstock is becoming ever tighter, which is why the standard PP segment has seen some production cycles changed round. In addition, technical problems have hit some copolymer production facilities. What’s more, cracker plants for the production of feedstocks such as ethylene (C2) and propylene (C3) are currently out of action, although only for a relatively short time. Set against this backdrop, automotive suppliers are consistently raising their order estimates. What this boils down to is that buyers will find it very difficult to resist producers' firm intentions to raise prices, and will be forced to shell out at least the higher costs.
|Prices Engineering Thermoplastics (EUR/t)|
|Polymer types||January 2011||December 2010|
|white / black||2,110||-||2,280||1,990||-||2,160|
natural / black, up to 30% GF
|natural / black||3,240||-||3,470||3,120||-||3,350|
|20% talc-filled, light colours||1,670||-||1,790||1,580||-||1,700|
|20% talc-filled, dark / black||1,450||-||1,530||1,360||-||1,440|
|NOTE: The prices in the table are based on information obtained by Plasteurope.com from plastics converters and producers, distributors and traders. As technical thermoplastics show large price differences, depending on annual demand, application and importance of the buyer, these numbers – for west European first grade – should serve only as a guideline. The price ranges refer to bulk shipments in single loads of 3-10 tonnes. Colour surcharges vary according to pigments and colourants used (heavy metal- and diaryl-free, temperature resistance, light and weather stability and, if applicable, BGA/FDA requirements). Data without guarantee. Compiled: 31 January 2011.|
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