LOS ANGELES
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September 16, 2022
(Industry Intelligence Inc.)
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US Resins US resin pricing may have hit a low point in the week of Sept. 5, shifting from the past several months of ongoing, aggressive discounts. Across PE and PP resins, branded prime contracts saw the least amount of pricing relief. Meanwhile, generic prime and off grade material fell significantly further. August PE contracts decreased by an average of US$0.05/lb. An increase of $0.05/lb proposed for September would likely only apply if hurricane season brings significant disruption to production. PP contracts dipped $0.01/lb in August, with no price increases currently on the table. Spot prices, however, remain well below contract levels. The primary source of this information is Plastics Today. Europe’s chemical industry market conditions have deteriorated in the past month, according to Dow and LyondellBasell officials presenting at Credit Suisse Specialties & Basics Conference. According to Ken Lane, EVP, global olefins & polyolefins at LyondellBasell, the past six weeks have seen a marked decrease in demand and margins. For Europe in particular, inflation and energy costs pose a challenge to bottom lines. In Asia, LyondellBasell notes that conditions have neither worsened nor improved recently in an already challenging environment. Meanwhile, US demand has remained relatively healthy, but pressures in export markets are finally starting to hit home. Dow’s President and CFO Howard Ungerleider also pointed to Europe as a source of higher energy and feedstock costs and record inflation, resulting in weak demand and consumer spending. While market conditions in Asia are still a challenge, Ungerleider noted that interest rate cuts in China and ongoing recovery from the pandemic could signal a healthier 2023. Dow expects its Q3 EBITDA to fall short of analyst expectations by 25%, while revenues fall short by 4%. The primary source of this information is Chemweek. Global polymer prices are caught in a downward spiral as demand dissipates, a response to record inflation, rising interest rates and economic uncertainty. Analysis of pricing trends points to May as a turning point for prices across PVC, homopolymer PP and HDPE blowmolding. In the US Gulf, August passed without seasonal storms that would typically interrupt production, a stark change from weather events in 2021 that, in contrast, had driven prices upward. Storm-related outages would typically allow products to offload excess supply that was keeping prices low. In current market conditions, however, sources say a hurricane probably won’t affect prices. Meanwhile, expectations for an economic downturn are putting additional pressure on prices. PE demand is typically more resilient to economic challenges due to its use in consumables like food packaging Meanwhile, PVC and PP are used often in durables such as building products, household appliances and automotive—which tend to be heavily influenced by economic trends. The primary source of this information is S&P Global Platts.
Europe Chemical Market Outlook
Global Polymer Prices
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