December 2016 - Plastribution · C3 prices falling, and Styrene Monomer prices increasing...

December 2016A confusing picture with oil prices increasing, GBP strengthening, C2 and C3 prices falling, and Styrene Monomer prices increasing significantly.

0845 34 54 560www.plastribution.co.uk

2www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] and feedstock price data provided by PIE. www.pieweb.com

Welcome to price know-how

A monthly publication looking at key factors that affects UK polymer markets.

Price Know-how Glossary

The concept of a user friendly market report came from feedback about an article published in PRW (Plastics & Rubber Weekly) about the 2011 market outlook to which Plastribution made a significant contribution.

Whilst some price surveys currently exist they are often difficult to interpret, use foreign currencies, and differing units of measure. Price know-how aims to be relevant by providing an overview, material group specific reports and more general economic information including exchange rates and GDP growth. To keep things relevant the report is in £ Sterling with tonnes as the common unit of measure.

The objective of the report is to form the basis of discussion about issues such as pricing and availability and so be a basis on which to consider purchasing strategies.

It is also believed that the report will support customers in explaining polymer price trends to their own customers, employees and shareholders.

As always we would welcome your feedback, and as ever your sales team is available to discuss your specific requirements.

The Plastribution Team

Monomers

C2 – Ethylene

C3 – Propylene

SM – Styrene Monomer

Naphtha

Derivative from the crude oil refining process, which is then

typically passed through a (Steam) Cracker to produce various

feedstocks including C2 and C3.

Force Majeure (non-legal definition)

Since accepting an order circumstances outside of the

supplier’s control, and which could not have been foreseen,

now prevent the supplier from fulfilling the contract either in part

or in full. By declaring Force Majeure the contract is to supply is

cancelled.


Coal Methanol Formaldehyde Acetal

Polyethylene

Polypropylene

Polystyrene

Phenol

Acetone

Styrene

Cumene

Ethylbenzene

ABS

PMMA

SBR

LDPE, HDPE, LLDPE

MTO

Olefins

Dehydrogenation Methane

Crude Oil Naptha Aromatics Toluene

Benzene CylclohexeneAdipic Acid Nylon 66

Nylon 6Caprolactam

Xylenes

Ethane

Propane

Butane

Condensate

Ethylene (C2)

Propylene (C3)

Butadiene (C4)

Butene

Natural Gas

Steam Cracking

From Hydrocarbons to Polymer

A simple diagram explaining the production routes from the major hydrocarbon sources through feedstock to the most common polymer groups.


•Political •War•Natural Disaster

•Changes in consumer markets

•Geographical shifts

in supply/demand

External Factors•Currency•Short term demand•Short term reductions in capacity•Arbitrage of Polymer•China & SE Asia supply/demand•Trader Activity

Market•Monomer Pricing Styrene Propylene Ethylene Benzene C4

Polymer Producers

Main drivers of polymer prices

•Polymerisation Margins•Inventory•Planned & un-planned outages

Feedstock

•Oil

•Gas

•Shale

•Naptha


To register an interest Call us on 01530 560 560 or email

[email protected]

www.plastribution.co.uk

Injection moulding for commercial staff

Course overview

The course will include a blend of theory and practical sessions over a period of two days, covering a wide range of topics that combined will provide candidates with the knowledge to make educated decisions when specifying and procuring material.

Typical Content • Introduction to Polymers• Material classification and overview• Data sheet interpretation• Introduction to injection moulding• Understanding melt flow• Physical properties of materials• Common industry standards

Appropriate CandidateThe course will be suited for people in a commercial or non-technical role who feel they could benefit from a general understanding of injection moulding materials, machines and the processing of polymers.

Course Dates and LocationThe dates for this two day course are the 15th & 16th March 2017. The course will be held at the PTIC (Polymer Training & Innovation Centre),Trevithick House,Stafford Park 4, Telford, TF3 3BA.

Information and BookingFor more information or to reserve a place on the course please contact Duncan Scott.

Telephone: +44 (0)1530 560560 Mobile: +44 (0)7768 716227 Email: [email protected]


Perhaps the situation was more distinct before OPEC struck a deal to restrict crude oil production. Whilst the odds were stacked against the first OPEC agreement to limit production for over 8 years, it appears that the markets have reacted favourably as far as oil prices are concerned and prices have surged by almost $10 per barrel in recent days.

The sustainability of this recovery is yet to be seen and no doubt the opportunity of further gains will probably be limited by speculators looking to sell out of their positions and take some gains. Given the deal on oil was subsequent to the Ethylene (C2) and Propylene (C3) contracts being settled, there was a much welcome reduction in these important input cost.

This, coupled with a strong recovery in the strength of the GBP, is likely to bring some relief to the UK market where the post-BREXIT devaluation of Sterling has created a challenging environment as buyers throughout the supply chain try to resist price inflation.

A confusing picture with oil prices increasing, GBP strengthening, C2 and C3 prices falling, and Styrene Monomer prices increasing significantly.


The styrene monomer situation reflects the tight supply situation that has in part resulted from the unplanned outage following the accident at BASF in Ludwigshafen, along with other capacities being shut for planned maintenance. As December is typically a month of low demand, and with nervousness regarding supply diminishing, it remains to be seen if these record prices can be sustained into the New Year.

It will be interesting to see if oil prices remain strong through into early 2017, and if so what impact this will have on feedstock prices at a time when there is typically a push for price increases on the back of strong demand as converters replenish stock and embark on Q1, which is a period not impacted by holidays.

In summary, it looks as if December will prove to be an interesting end to what has been another challenging year. Please don’t forget that in January we will be publishing the Price Know-how 2016 Review and 2017 Outlook.

A confusing picture with oil prices increasing, GBP strengthening, C2 and C3 prices falling, and Styrene Monomer prices increasing significantly.

Monomer Prices (£ GBP per tonne)

Feedstock Change (Contract)

C2 (Ethylene) -£26.09

C3 (Propylene) -£26.09

Styrene £147.87

Benzene £0.00

Brent Crude £46.24

Brent Crude per Barrel

30.0035.0040.0045.0050.0055.0060.00

USD GBP

Exchange Rates

1.100

1.150

1.200

1.250

1.300

Euro USD


Polyolefins

LDPENovember started with producers trying to pass on the full feedstock increase and also correcting for the further devaluation of Sterling. However, flat demand meant that by mid-month many had softened their stance. Despite capacity reductions from some European manufacturers, there seems sufficient product to go around.

December has seen a feedstock reduction and this has largely been passed on. The strengthening of Sterling has also provided some respite for processors. However, the rising oil price has meant that naphtha and spot feedstock prices have started to increase. There are rumours of strong increases for January.

Data provided by PIEwww.pieweb.com

LLDPEAs with LDPE, price increases were announced at the start of November to reflect the increased feedstock costs and weak value of Sterling. However, deals were available as the month progressed in an attempt to stimulate demand. Rumours abounded that there was little traded product heading to the UK because of the poor value of Sterling, but there seemed sufficient product to meet demand.

December has seen a reduction in the cost of Ethylene, which has been passed on to converters, along with the benefit of the strengthening Pound.

Significant increases are rumoured for January.

HDPEPrice increases were imposed at the start of November to reflect the increased Ethylene costs and weak value of Sterling. However, as with the other Polyethylene product families, there were deals available for those with sizeable orders to place.

The pricing situation has reversed in December with both feedstock prices and Sterling working in favour of UK processors.

Price increases are expected for January, but demand is likely to be a key determinant in the degree of success.

PPNovember saw further increases in Propylene costs, which were passed on by producers. The further devaluation of Sterling also put pressure on UK prices. However, ongoing conditions of flat demand meant that some sellers were willing to do deals to secure orders.

C3 pricing has reduced in December and producers have passed this reduction on, although spot Propylene rates have increased in line with rising oil and naphtha prices. Price increases are therefore thought likely for January.

Other PolyolefinsEVA availability is balanced to good, with no reported production issues at the major European producers. Demand continues to be mediocre to average, meaning there is sufficient product in the market place. Despite the increase in feedstock costs, in November most producers rolled prices over, although the weakness of Sterling impacted UK prices.

The feedstock reduction for December has been passed on, recognising that supply has returned to normal and demand levels are flat.

Supply Supply Supply Supply

Demand Demand Demand Demand

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

£ p

er t

onn

e

Brent Crude

Naphtha Spot

Ethylene (C2) Spot

Ethylene (C2) Contract

Propylene (C3) Spot

Propylene (C3) Contract

Polyolefin Basket

No

v -1

5

De

c -

15

Jan

-16

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

£ p

er t

onn

e

Brent Crude

Naphtha Spot

Ethylene (C2) Spot

Ethylene (C2) Contract

Propylene (C3) Spot

Propylene (C3) Contract

Polyolefin Basket

No

v -1

5

De

c -

15

Jan

-16

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16


Styrenics

PSNovember Styrene Monomer contract prices rose by €40/T but, in the main, producers did not pass this on in full. Supply was very good, but demand was subdued early in the month. SM spot price rose through November, driven by possible shortages due to a major plant shutdown, driving demand upwards with the expectation of strong increases on the way for December PS.

December SM contract price settled at +€170/T, a new high for 2016. GPPS and HIPS pricing will follow this trend, but as demand is currently low due to the Christmas break, some short term deals are available. Talk of reduced monomer supply in Europe seems to point away from prices falling back in the short term.


ABSThe upwards march of ABS prices continues, due to a combination of hikes in AN, BS and SM. Greatly increased demand from the Chinese market has removed any slack from the system, and lead times for Asian grades have increased. It seems likely the steady rises will continue.

PC/ABSAs usual, PC/ABS is following the trend of ABS.

Other StyrenicsSAN and specialities such as ASA and SMMA continue to follow the price trend of Styrene monomers.

Supply Supply Supply

Demand Demand Demand

Brent Crude

Benzene Spot

Benzene Contract

Styrene (SM) Spot

Styrene (SM) Contract

Styrene Basket

£ p

er t

onn

e

£1,760.00

£1,560.00

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16

Brent Crude

Benzene Spot

Benzene Contract

Styrene (SM) Spot

Styrene (SM) Contract

Styrene Basket

£ p

er t

onn

e

£1,760.00

£1,560.00

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16


Engineering Polymers

PA6Suppliers are gearing up for price increases in Q1. Their aim is to keep supply to the market as low as possible, and with the Christmas holidays looming, demand is likely to decline.


PA66Although many were hoping for increases, with reduced volumes in Europe due to Technical issues, for most the pricing rolled over. Going forward, a similar picture to PA6.

POMMost players are keen to start the year on the offensive, trying to implement price increases in Q1. Demand is expected to decline over the next month, due to the Christmas holidays.

PCReduced output to meet the decline in demand as we run down to the Christmas period. Producers are expected to come back into the market in the New Year with increases.

PMMASome producers have increased prices in December, and others are likely to follow suit early in the New Year.

PBT/PETThe market is likely to remain stable for the remainder of the year, but there is a strong possibility that prices may develop early in Q1.

Supply Supply Supply Supply Supply SupplyDemand Demand Demand Demand Demand Demand

Brent Crude

Benzene Spot (EUR/t)

Benzene Contract(EUR/t)

Naphtha Spot (EUR/t)

Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16

Brent Crude




Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16


Engineering PolymersData provided by PIEwww.pieweb.com

Other Engineering PolymersThe situation for most other engineering polymers points towards stability, with supply and demand in balance.

Brent Crude




Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16

Brent Crude




Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16


Fundamentals

Topic Item Date % Trend

GDP Real GDP (Q on Q) Q3 2016 0.4

GDP Real GDP (Y on Y) Q3 2016 0.8

UK Output Manufacturing (M on M) Sep 0.6

UK Output Manufacturing (Y on Y) Sep 0.2

Sales New Car Registrations (Y on Y) Oct 1.4

Sales Retail Sales (M on M) Oct 1.9

Labour Unemployment Rate Sep 4.8

Prices CPI (Y on Y) Oct 0.9

Prices RPI (Y on Y) Oct 2.0

Interest Rate Bank of England Base Rate November 0.25

1. Oil Price

Oil prices have firmed on the back of an OPEC deal to curb production and $50 per barrel appears to be a fairly stable base.

2. Exchange Rates

The Sterling/Euro exchange rate is a key factor in determining polymer prices, since most materials are Euro denominated. At current price levels, each Euro Cent change in price represents a £10 per tonne impact on our polyolefins materials basket. The Sterling/USD exchange rate tends to be more influential on the price of ABS, PC and POM.

The UK Brexit vote resulted in a significant revaluation of the GBP against both the Euro and USD.

UK Economic DataBrent Crude Oil Price per tonne

Exchange Rates

USD per tonne GBP per tonne

500.00

450.00

400.00

350.00

300.00

250.00

200.00

150.00

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

e -

16

July

- 1

6

Au

g -

16

Sep

t -

16

Oc

t -

16

No

v -

16

Ma

r – 1

5A

pr –

15

Ma

y –

15Ju

n –

15

Jul y

– 1

5A

ug

–15

Sep

- 1

5O

ct

- 15

No

v -

15D

ec

- 1

5Ja

n -

16Fe

b -

16

Ma

r - 1

6A

pr -

16

Ma

y -

16Ju

ne

- 1

6Ju

ly -

16

Au

g -

16

Sep

t -1

6O

ct

- 16

No

v -

16

1.75

1.65

1.55

1.45

1.35

1.25

1.15

1.05

GBP vs Euro

GBP vs USD

Euro vs USD

This report is produced based upon the following fundamentals: -

• EURObasedpricingforfeedstockand polymer pricing

• ConversionofEuroandUSDbasedprices at prevailing exchange rates

• ProductbasketsweightedaccordingtoUKconsumption

AcknowledgementsWe would like to thank the following organisations for their support in producing this report: -

PIE (Plastics Information Europe) www.pieweb.com

HM Treasury www.hm-treasury.gov.uk

DisclaimersThe information provided in this report are based upon data available from both external an internal sources, and whilst care is exercised in producing this report we give no guarantee of accuracy.

Furthermore we accept no liability for purchasing decisions based upon the information provided as the petrochemical market is complex and volatile.

© Plastribution Limited. All rights reserved. 2014

Plastribution LimitedClinitron House, Excelsior Road, Ashby Business Park, Ashby-de-la-Zouch, LeicestershireLE65 1JG

Tel: +44 (0) 1530 560560Fax: +44 (0) 1530 560303

Email: [email protected]

Methodology

December 2016 - Plastribution · C3 prices falling, and Styrene Monomer prices increasing...

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