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MARKET HIGHLIGHTS: OCTOBER 2019

October 10, 2019

LONDON (GC Intelligence) – Engineering polymer prices in Europe look set to post more decreases in October as market fundamentals remain weak across most sectors.

The situation is becoming critical in some markets such as polycarbonate (PC) and nylon 6 (PA) where margins on some accounts are close to zero or even negative.

Prices have been on a downward trend for most polymers since the end of 2018, starting with a slowdown in automotive due to environmental legislation and continuing with trade tariff disputes causing a gradual slowdown in growth throughout 2019.

As the end of the year approaches, there is little hope for a turnaround in demand, especially since some sectors, such as construction, tend to slow down during winter.

As the current market weakness is expected to continue into 2020, there is little incentive from buyers to fill stocks, even if prices for some polymers are currently very attractive.

Polycarbonate

PC prices while still going down appear to be reaching the bottom as there are indications that rollovers were also being negotiated in October, and for November.

Acrylonitrile Butadiene Styrene

ABS could also decrease October. While it is too early in the month, there is a good chance that a decrease in the raw material styrene and ongoing pressure from Asia imports in a European market where demand is weak could cause yet another margin squeeze.

Nylon 6

PA6 prices were going down in a market characterized by structural oversupply. The decrease in benzene prices in October gave some relief to a suffering caprolactam market. The situation was becoming critical for PA6 producers as prices in some cases were getting close to raw materials costs.

Nylon 66

PA66 sellers on the other hand, while also experiencing falling prices, were still enjoying heathy margins. The decrease in prices from the peak reached in 2018 has not been as dramatic as in other polymers. One plausible explanation is that there are still concerns over potential supply shortages as a lengthy shutdown of the only plant in Europe of the key adiponitrile (ADN) is currently underway.

Polymethyl Methacrylate

PMMA is one of the worse performing markets in October. There is fierce competition in an oversupplied global market and a relentless pressure from Asian importers proposing extremely low offers.

The best-case scenario across all engineering plastics markets for the rest of the year is the status quo. This is plausible because there is likely to be resistance to further downside swings since some participants are already experiencing negative margins. But at the same time, players said they have little hope that the markets will recover and that they expect a further slowdown in 2020.

NOTE: For price levels, forecasts, and a more in-depth analysis take a look at the GC INTELLIGENCE® Market Reports…

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