January 2017 - Plastribution · to follow the price trend of Styrene monomers. Supply Supply Supply...

January 2017A new year heralds higher oil prices and fresh calls for price increases, which are likely to be influenced by a recent fall in the value of the GBP following a strong rally at the end of 2016.

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]


On the back of the December OPEC deal, the price of crude oil has continued to gain momentum. Rumours of curbing production in non-OPEC regions is helping prices to remain buoyant, and Naphtha prices have also reflected this increase. With a subsequent uplift in C2 and C3 prices, there will be a strong desire to increase PP and PE pricing so that producers can maintain margins.

Following the rally in the value of GBP versus the Euro, which started at the beginning of December, recent uncertainty about the implications of BREXIT has reversed the trend and the Pound has fallen significantly in recent days. This situation will inevitably create price inflation due to prices typically being Euro or USD denominated.

The hike in Benzene and Styrene monomer price has resulted in significant increases throughout the Styrene polymer range. In particular, the increase in ABS prices has been notable, where supply in Asia looks particularly tight. The impact on polystyrene pricing has also been very significant.

In the case of Engineering Polymers, this is typically the time in the year that producers seek to implement price increases. Whilst implementation from the start of the year has only had limited success, the level of determination to lift margins across a wide range of materials is tangible, and these calls will be exaggerated by the recent devaluation of the GBP.

A new year heralds higher oil prices and fresh calls for price increases, which are likely to be influenced by a recent fall in the value of the GBP following a strong rally at the end of 2016.

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


Polyolefins

LDPEThe December Ethylene feedstock reduction was passed on by most, (but not all), producers. Sterling also strengthened, which provided some further respite for processors. However, there were signs as the month progressed that price increases were likely, particularly as the increase in oil price meant that naphtha and spot feedstock prices were on the rise.

As expected, C2 prices increased in January and all producers sought to recover this cost increase, with some adding a further increase expecting strong demand and citing balanced to tight supply. Many consumers rebuffed these attempts, willing to accept only the increase in feedstock costs. There are some reports of tight supply, and therefore further price increases, but we have yet to see confirmation of this.

Data provided by PIEwww.pieweb.com

LLDPEDecember saw a reduction in the cost of Ethylene, which was passed on to converters along with the benefit of the strengthening Pound. Supply was sufficient for the reduced demand of the holiday period, although rumours abounded that supply of C4 LLDPE from traders was tight.

The increase in the Ethylene feedstock costs have been successfully applied in January. Again, there are rumours that the market is tight and that further increases are likely.

HDPEThe Ethylene feedstock reduction and strengthening value of Sterling provided some respite for processors in December. Some producers were also offering deals in a bid to minimise their stock levels by year end.

The situation has reversed in January, with producers announcing increases to recover the increase in C2 costs. Some producers sought additional increases, but this has been met with stiff resistance to date. Whilst there is sufficient material to meet demand, the market appears balanced/tight.

PPC3 pricing reduced in December by €30/T and producers passed this reduction on. Sterling also strengthened in December, meaning that further savings were available. However, as the month progressed, spot Propylene rates increased in line with rising oil and naphtha prices. It was therefore of little surprise when feedstock increases of €45/T were announced in January. Producers have passed these on in full, protecting their margin.

Supply seems adequate to meet demand, but with some planned shutdowns approaching, many producers are holding customers to their regular offtakes.

Other PolyolefinsFor EVA, the C2 feedstock reduction for December was passed on. There was also some benefit to processors in the strengthening of Sterling. Availability seemed sufficient to meet the lower demands of the holiday period.

Pricing has again followed the feedstock settlement in January. Whist demand and supply seem in balance, there are signs that availability of some grades is starting to tighten.

Exchange rate volatility continues to be disruptive.

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

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 -1

6

De

c -

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

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 -1

6

De

c -

16


Styrenics

PSDecember Styrene Monomer contract prices settled at €170/T and PS prices followed, but producers did not pass this on in full. Supply was very good, but demand was subdued early in the month, rising towards the end of the period as the threat of further increases in January loomed.

January has delivered further SM rises (+€105/T). GPPS and HIPS will follow this trend, but demand is currently low, due production ramp up after the Christmas break. Continued prediction of reduced monomer supply in Europe seems to point away from price reductions in early 2017.


ABSABS prices reached a yearly high in December, and demand followed a similar trend to Polystyrene, as further increases appeared on the horizon.

January continues the trend, with SM, BD and ACN facing triple digit rises. 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 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

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

De

c -

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

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

De

c -

16


Engineering Polymers

PA6Suppliers have been preparing the market and customers for an upward price rise early January, indications are for triple digit increases. Demand is expected to pick up pace into quarter one as the holiday season comes to an end.


PA66As expected, producers are looking for price increases similar to PA6. Output is likely to remain low to help their cause for increases.

POMWith restricted supply for some in Europe, and a higher price in Asia, most suppliers are keen to implement price increases early Q1.

PCProducers have already issued price increases of triple digits. Given a higher price in Asia, it seems likely that most of this could be achieved. Output is unlikely to ramp up too quickly to help with the call for increases.

PMMAPrice increases were already implemented at the back end of 2016 and demand appears strong, so it will be no surprise if they continue on the offensive and push through further increases.

PBT/PETAs for other materials, output is likely to remain low to aid with the call for price increases.

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

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

De

c -

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

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

De

c -

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, although cost pressures may trigger price increase announcements.

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

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

De

c -

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

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

De

c -

16


Fundamentals

Topic Item Date % Trend

GDP Real GDP (Q on Q) Q3 2016 0.0

GDP Real GDP (Y on Y) Q3 2016 0.2

UK Output Manufacturing (M on M) Sep -1.0

UK Output Manufacturing (Y on Y) Oct -0.5

Sales New Car Registrations (Y on Y) Nov 2.9

Sales Retail Sales (M on M) Nov 0.2

Labour Unemployment Rate Oct 4.8

Prices CPI (Y on Y) Nov 1.2

Prices RPI (Y on Y) Nov 2.2

Interest Rate Bank of England Base Rate December 0.25

1. Oil Price

Oil prices have firmed on the back of an OPEC deal to curb production. $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

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

De

c -

16

Ap

r – 1

5M

ay

– 15

Jun

– 1

5Ju

l y –

15

Au

g –

15Se

p -

15

Oc

t -

15N

ov

- 15

De

c -

15

Jan

-16

Feb

- 1

6M

ar -

16

Ap

r - 1

6M

ay

- 16

Jun

e -

16

July

- 1

6A

ug

- 1

6Se

pt

-16

Oc

t -

16N

ov

- 16

De

c -

16

1.80

1.70

1.60

1.50

1.40

1.30

1.20

1.10

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

January 2017 - Plastribution · to follow the price trend of Styrene monomers. Supply Supply Supply...

Documents

Transcript of January 2017 - Plastribution · to follow the price trend of Styrene monomers. Supply Supply Supply...