Last month, western European buyers of engineering thermoplastics again had to pay the price for the consistently healthy business situation. Although the upward pressure that characterised Q3 eased slightly there were several increases involving more specialised materials, including PBT, POM and PMMA. The rise was smaller with ABS and PC. Albeit being stuck in a rollover, polyamides remained at an extremely high level. Only PP compounds, closely linked to the standard thermoplastics, dropped by EUR 20/t on account of the cheap standard material.

Producers continued to require long delivery times in order to meet demand. In the case of notoriously short PA 6.6, market players were unable to predict any improvement to the supply situation, simply describing it as "less critical". The shortages increased with PC, PBT and POM.

Demand picked up following the end of the holiday period as buyers started to fill up their stocks. Converters reported consistently high ordering activity from the automotive sector, while E&E continued lively.

The beginning of the final quarter again saw several announcements of price increases by producers. Problems are looming in particular because of cost increases for additives such as glass fibres and flame retardants. Nevertheless, large-volume materials such as PP compounds, ABS, PC and PA seem to be taking a breather, while the more specialised grades are likely to climb further. PMMA in particular is being sucked up by the enormous boom in flat screen production in Asia. In a situation that could mirror the recent experience with polyethylenes, China’s business could cause quite a few upset stomachs in Europe.

Nothing has changed with regard to the forces majeures for PA 6.6 at Rhodia and BASF, which are expected to be lifted during the course of Q4 (Rhodia) and in the coming year (BASF).

After BASF concluded the annual maintenance of its styrene line in Antwerp / Belgium at mid-month as scheduled, ABS production has returned to normal.

The caprolactam facilities of Japanese suppliers Ube and Sumitomo will undergo maintenance work in October.

The situation for individual polymers in September 2010 was as follows (research conducted in the 39th calendar week):

Change September against August: Up EUR 10/t
On the whole, producers did not announce any fresh price increases for the final month of Q3, although one of them was still trying to push through a hike of EUR 150/t to make up for previous margin losses. The cost of key ABS component styrene monomer (SM) went up by an average of EUR 33/t compared with August. September’s butadiene contract price slipped by EUR 10/t, while the quarterly (Q3) contract rose by EUR 205/t. At the time of writing, no contract price had been announced for acrylonitrile (ACN) although spot market prices jumped by as much as EUR 40/t in the second half of the month. With ACN prices stable, the ABS cost mix would rise by around EUR 15/t. There was little room for manoeuvre due to maintenance turnarounds and a lack of material from alternative sources. As producers decided to quash particularly low prices, notations at the bottom end of the scale rose by an average of EUR 20/t.

Supply: Balanced to tight. Producers differed in their ability to supply, which meant they were not always able to meet customers’ demands on time. As a result of BASF's annual maintenance at its Antwerp site, ABS production was rather sporadic and western European output of natural ABS declined noticeably as a result. At the same time, imports were few and far between. If they did arrive, then mostly for the extrusion grades used in sheet manufacture, which were in very short supply and fetched exceptionally high prices. White ABS also became increasingly scarce during the course of the month.

Demand: Normal. Initially, there was a general scramble to top up stocks as the holiday period drew to an end. With supply becoming ever tighter, a few customers went on speculative pre-buying sprees. The automotive segment continues to lead ordering activity, both for standard car production and increasingly also for sheet material used in utility vehicles and caravans.

Outlook for October: The three SM contracts showed an average drop of around EUR 13/t. October’s monthly butadiene contract has dropped EUR 125/t, while the Q4 contract is EUR 155/t lower. Although ACN prices moved up slightly in September on the spot market, no contract had been signed by the time of writing. Assuming that the cost of ACN will remain stable, the ABS cost mix will decrease by an average of around EUR 30/t. Nevertheless, producers speaking to Plasteurope.com did not appear too willing to slash prices. Quite the contrary: One supplier was seriously contemplating hiking prices at least for white material. Given the lively demand, said supplier is seeking to sell existing volumes with a surcharge of up to EUR 50/t. The risk of an increase thus remains, despite the tendency to lower costs.

Change September against August: Up EUR 25/t
Mimicking benzene, the cost of phenol fell by EUR 72/t in Q3. Nevertheless, the lower costs did not affect PC notations. On the contrary, both producers and distributors added further fuel to a fire that has seen PC prices heating up for several months now, with the result that bulk business transactions ended the month EUR 50/t higher. This means that in Q3 producers have managed to recoup a total of EUR 125/t of the original EUR 250/t they had initially targeted to make up the drastic cost increases in the first half of the year.

Supply: Balanced to tight. Output declined significantly as a result of the maintenance works carried out by a German producer and also because any stocks built up beforehand melted too quickly to meet demand in a timely fashion. Large PC capacities in Asia were also down for maintenance. Depending on the source, most suppliers report 10 weeks delivery time for transparent PC, although one producer told Plasteurope.com that the delivery time for standard material had shrunk from eight to six weeks. As far as the coloured grades are concerned, the previous average delivery time of 14 weeks has apparently been reduced to 11-13 weeks.

Demand: Normal. One producer reported being completely sold out but added that converters were often moving orders around. Others talked of lively ordering activity, alleging that they could have come up with additional volumes had the need arisen. One converter supplying the lighting industry reported a return to short-time working in some segments in September. All signs point to the fact that buffer stocks have been built up again in the PC chain.

Outlook for October: One major distributor conceded that he has not yet been able to pass on all his suppliers’ surcharges, but is adamant that this reality will change in Q4. Producers, on the other hand, are keeping a low profile for now, calling for strict price discipline. Soon, the maintenance work on large plants in western Europe and Asia will come to an end. At least the standard range is likely to see output improve gradually, leading to shorter delivery times. Asian suppliers apparently will start shipping material towards Europe in the second half of the month. "We expect the materials to arrive in November," one trading company told PIE. All this means availability could improve considerably over the course of Q4, at least as far as the standard material is concerned. The signals continue to be mixed when it comes to demand. Whereas suppliers of premium vehicle manufacturers are counting on stable orders until the end of the year, firms who supply the domestic appliance segment have already returned to business as usual. Generally speaking, improved availability could brighten up the outlook for converters, although orders from medium-sized companies still face a risk of hikes.

Change September against August: Unchanged
Producers were unable to justify any calls for fresh price increases. Following the hikes of H1 2010 by mid-year notations were already around EUR 450/t higher than at the start of the year. By that point, benzene had added around EUR 100/t and caprolactam nearly EUR 400/t. After that, there was little movement on the cost side during the course of Q3, as caprolactam tended predominantly sideways. In the case of virgin polyamide 6 resin (the base material of compounds), the decline of EUR 40/t in August was followed by a rise if EUR 25/t in September. It should, therefore, come as no surprise that the upward price momentum stalled in Q3 and that producers had nothing new to report in September.

Supply: Balanced. Even though the summer lull was fairly muted, it had a positive effect on producers' availability. Nevertheless, they still differ in their ability to supply. Some have reported full order books until the end of the year, while others operating in the standard range have started quoting delivery times in weeks rather than months.

Demand: Normal. One major producer described incoming orders as "stable but with slight downward tendency". Distributors also report a gradual easing of the situation, although orders remain fairly consistent across the board. Converters describe the situation in similar fashion, although in their case, they talk of "overheating" in the first half of the year and "normalisation" now.

Outlook for October: As this report was being written, there was no word of any proposed increases. On the cost side, the EUR 36/t drop in the price of benzene gave rise to an initial sense of relief. Additional improvements are also evident on the supply side. There are first reports in the automotive sector of forecasts being revised downward quite significantly. The peaks have been eradicated and H2 demand is between five and eight percent lower, reports from the supplier industry indicate. Overall, all indications are that the upswing is rapidly losing momentum and a basis gradually seems to be forming for objective price talks. It is quite probable that Q4 will kick off on a stable footing.

Change September against August: Unchanged
Notations for adipic acid remained at a high level in Q3, a reality that dissuaded producers from submitting further calls for increases as the quarter came to a close. It would be impossible to generalise the various initiatives undertaken by individual suppliers to extract higher prices from their customers. These efforts notwithstanding, notations essentially remained unchanged. Nevertheless, Plasteurope.com received reports of price rises that were "out of touch" with the real world. The feigned stability is misleading as many converters are still complaining about being unable to pass on much of the raw material cost increases to their OEMs. "We consider it a major success that we succeeded in warding off the calls for a 6% price reduction to our products."

Supply: Very tight. Producers did not vary much in their ability to supply. With no one willing to even talk about any easing of the situation, the consensus is that the reality has become "somewhat less critical." One distributor remarked: "Depending on the source, we saw our volumes slashed from 20 tonnes to two tonnes. Today, our allocation has been raised to three tonnes." The situation is even worse for flame-retardant grades which continue to suffer very large capacity bottlenecks.

Demand: Normal. The vast majority of PA 6.6 found its way into the automotive sector, as a quick look at the high-temperature, under-the-bonnet segment testifies. This year, German premium vehicle builders have supplied some 600,000 engines to the Chinese market.

Outlook for October: Even though there are no real arguments in favour of general price hikes, the situation is looking very threatening for the flame-retardant grades. Producers polled by Plasteurope.com were unanimous in their belief that the cost increases for the scarce flame-retardant additives are having an ever more serious effect on PA compound prices. Still, it remains unclear how and when price initiatives will follow suit. As far as supply is concerned, the extension of the supply contract between Invista and DuPont shows there is light at the end of the tunnel. The renewal of this important cooperation agreement should have a calming effect on the market. On the demand side, suppliers to the E&E and automotive sectors say their order books have not experienced any downturn in Q4. "We are keeping our order levels steady and they will remain at a high level." Usually a time of tranquility and contemplation, all signs are pointing to further upwards momentum in Q4. At least with the flame-retardant material, hikes seem increasingly inevitable.

Change September against August: Up EUR 50/t
Mirroring its rise in August, "classic" E&E material climbed by an average of EUR 50/t. Taking into account their initial Q3 target of an extra EUR 200/t, producers have managed to net at least EUR 100/t. The price offensive was justified by mounting feedstock costs, with producers complaining about being particularly hard hit by the leap of EUR 350/t in the Q3 contract for butanediol (BDO).

Supply: Balanced. Depending on source and grade, producers differed in their ability to supply. Some sources were able to deliver standard material within eight weeks, but the more specialised the grade, the longer the delivery time – in some cases extending to 12 weeks. As Q3 progressed, the poor exchange rate nipped in the bud any chance of a greater inflow of imports, a reality that hardly changed in September.

Demand: Normal. As expected, converters began topping up after the summer holidays although this activity did not result in a downturn. Orders from the E&E segment in particular continued to be brisk.

Outlook for October: One major producer has dismissed any additional price initiatives in Q4, but admits that a lot of consideration will have to be given to raising prices at the beginning of 2011 due to mounting energy costs. By contrast, the protective duties imposed by the EU on Chinese glass fibre products stirred up emotions. Players believe such measures will hit PBT particularly hard. "Some 30% of our volumes are reinforced with glass fibres, much of which we buy abroad. In many E&E applications, it is an absolute must," one of them told PIE. From an objective point of view, cost increases of up to EUR 150/t are to be expected. On the supply side, PBT still tends to be short. The more specialised the material, the longer the delivery time. The situation is compounded by the shortage of polyester feedstocks, especially DMT. In addition, the usual PBT imports from Asia have not materialised. On the demand side, however, business remains lively, with orders for the production of coffee machine parts particularly strong. Just about everyone would like to see stable prices at the beginning of the final quarter of 2010, but, in view of the many negative influences, it is difficult to see how this might happen.

Change September against August: Up EUR 60/t
One large copolymer producer had opened Q3 with calls for an extra 10% and was soon followed by a western European supplier with Asian roots who chipped in with calls for an extra EUR 150/t and as much as EUR 250/t for high-viscosity material and speciality grades. As it turns out, producers managed to win an increase of EUR 160/t in the summer months, of which they secured EUR 60/t in the final month of Q3.

Supply: Balanced. BASF's POM plant has yet to resume full operatins following annual maintenance. Most export inquiries have had to be turned down. Its relocation plan has forced Ticona to put its customers on allocation and to extend the delivery time for standard material from the usual two to four weeks. Only standard grades with MFI 9 were available through import, while higher-quality material for extrusion was generally short.

Demand: Normal. "Strong and order-driven" was the way a major supplier put it when talking to PIE. Converters report healthy order activity for premium cars and increasingly also for utility vehicles, where the situation now seems to have returned to normal.

Outlook for October: Although by the time of writing there were no news of any price increases to kick off Q4, many producers were nevertheless grumbling about the situation. Their displeasure was related less to the EUR 23/t rise in the Q4 contract for methanol than to the higher energy costs, which would make themselves painfully felt in the production of POM. Producers will need to think about the best course of action. On the supply side, the widespread feeling is that homopolymer material is more readily available than the copolymer grades. It should, however, be noted that the buffer stocks will dry up quickly as a result of the upcoming relocation of the copolymer market leader. As far as demand is concerned, converters' order books are well filled as Q4 gets underway although it remains to be seen whether prices will remain stable until the end of the year.

Change September against August: Up EUR 25/t
One supplier wanted to hike PMMA prices by 10-20% in the final month of Q3 but initially it were only notations at the bottom end of the scale that responded, rising EUR 50/t. It did not take long to work out that this increase was nowhere near enough to cover the EUR 250/t surge in the cost of methylmethacrylate (MMA) in Q3. However, producers explained that this drum-beating was also directed at the negotiations ahead of the Q4 contracts. Elsewhere in the world, PMMA notations rose drastically; buyers in Asia, for example, had to fork out USD 3,100/t for standard material.

Supply: Tight. Both standard material and extrusion grades for the production of sheet material were short. Suppliers were unable to meet the demand for high-impact grades on time. All in all, global capacities for the basic feedstocks butylacrylate and MMA are simply insufficient. Traders are complaining that they have received virtually no import volumes for the past eight months and have been completely cut off by Asian suppliers.

Demand: Normal to good. Most available volumes went to the automotive sector but solar energy applications also saw lively ordering activity.

Outlook for October: Yet another producer has joined the ranks of those calling for increases of EUR 250/t at the end of Q3 to recover the rise in the cost of acrylates. Most standard material continues to travel to China to meet the enormous demand there. In fact, the lion's share of global PMMA supplies goes to feed China’s insatiable hunger for flat screens and western European converters have to make do with the leftovers. The consistently healthy order situation will continue to be accompanied by long delivery times and the upcoming price negotiations. Since producers will not flinch when it comes to passing on the cost increase, significant price rises are on the cards.

Change September against August: Down EUR 10-20/t
Depending on the filler content, notations for PP compounds declined by up to EUR 20/t as a result of the EUR 10/t fall in the propylene (C3) contract for September and the delayed response of indexed contracts in the automotive sector within the agreed monomer band structures. One or two distributors bucked the trend, keeping notations unchanged – as they have done for the last five months.

Supply: Balanced. Western European output was generally sufficient to satisfy the demand without much delay. The situation was aided by the fact that one large compounder hired subcontractors.

Demand: Normal to good. Following the minor lull of the holiday season, the number of incoming orders quickly climbed back to its previous level. Automotive led the field, as new models went on stream in the Czech Republic, Slovakia and Poland, yielding particularly strong growth. Volumes for white goods also returned to their former level.

Outlook for October: Propylene (C3) slipped by another EUR 10/t in October although one distributor has already cautioned that additional price adjustments for his many small customers will occur only "once C3 drops below the EUR 900/t mark". It was, he added, simply too much hassle to pass on minimal cost movements. On the supply side, little has changed at the beginning of Q4. The capacities of integrated producers will continue to be supplemented by subcontractors hired to execute the orders on time. As far as demand is concerned, producers have not noticed any reduction in the forecasts originally submitted by their customers. All eyes have turned towards the white goods segment, as the more expensive materials used to date are to be replaced by PP compounds. With the mood on both fronts seemingly calm, prices could easily continue to roll on at their current level.

Prices Engineering Thermoplastics (EUR/t)
Polymer types	September				August 2010
ABS
natural	1,890	-	1,990		1,870	-	1,990
white / black	1,990	-	2,080		1,970	-	2,080
coloured	2,320	-	2,410		2,300	-	2,410
PC
transparent	3,100	-	3,350		3,050	-	3,350
glass-reinforced	3,630	-	3,700		3,580	-	3,700
PA 6
natural	2,650	-	3,040		2,650	-	3,040
black	2,490	-	2,940		2,490	-	2,940
glass-reinforced	2,790	-	3,260		2,790	-	3,260
PA 6.6
natural	3,450	-	3,750		3,450	-	3,750
glass-reinforced	3,550	-	3,790		3,550	-	3,790
PA
automotive grades natural / black, up to 30% GF	2,450	-	2,630		2,450	-	2,630
PBT
natural / black	3,070	-	3,350		3,020	-	3,300
glass-reinforced	3,120	-	3,400		3,070	-	3,350
POM
natural	2,670	-	3,050		2,600	-	3,000
glass-reinforced	2,970	-	3,150		2,900	-	3,100
PMMA
transparent	2,750	-	3,020		2,700	-	3,020
PP-Compounds
20% talc-filled, light colours	1,570	-	1,670		1,590	-	1,690
20% talc-filled, dark / black	1,350	-	1,410		1,370	-	1,430
GF2 30	1,740	-	1,930		1,750	-	1,940
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: 30 September 2010.

More on PIEWeb.com: Engineering Thermoplastics: Data & Charts