Market dynamics in April remain the same as in March, with good demand, tight supply, and high costs pushing up prices of all polymers. As markets face more turmoil, players are expecting the worst, namely that the upside will not ease any time soon, at least not until the summer. The disruptions are multi-layered and persisting, which suggests it will take time for supply chains to rebalance, a slow rebalance spread out over months rather than weeks.
Polycarbonate (PC) buyers are in the middle of a storm, facing long lead times, having to accept higher prices, and receiving lower volumes to meet their demand. Meanwhile, producers continue to battle with several issues, including a lack of bisphenol (A), high benzene prices, and prolonged supply issues in the US after the blackouts in February.
Polymethyl Methacrylate (PMMA) supply improved in April even if availability remains relatively tight. Imports from Asia are low as offers are for the most part much higher than domestic prices. Methyl methacrylate (MMA) spot prices increased to €3,000/mt, reinforcing expectations of a big jump in quarterly contracts.
Nylon 6 (PA6) shortages worsened in April and are pushing prices considerably above €2,000/mt, especially after the recent hike in the European benzene contract of €230/mt. The higher cost of raw materials is one cause among many that is supporting the current upside. Others include transport costs and shortages of other materials, such as additives and glass fibres.
Nylon 66 (PA66) players are arguably reliving the experiences of 2018, when extreme shortages gripped the market after a series of production glitches. But some note the situation is worse this time round because the shortages are happening across the value chain, from logistics delays and high costs to a shortage of additives.
Acrylonitrile Butadiene Styrene (ABS) prices will increase again in April and by a substantial amount after the styrene contract price increased by around €300/mt. Major producers have already announced big increases of €250-300/mt that will push prices above €3,000/mt for many buyers.
Styrene Acrylonitrile (SAN) supply improved in April after a tight acrylonitrile (ACN) market slowed down production and forced one major producer to declare force majeure (FM). Producers adapted to the shortage of ACN by sourcing volumes in the spot market, allowing them to improve operating rates in April. Nevertheless, prices will increase, supported by high costs, good demand, and low production rates.
Polystyrene (PS) demand is healthy and supply tight, with most market participants running low inventories. Prices are expected to exceed €2,000/mt after another big increase in the styrene contract. While supply is tight overall, high impact polystyrene (HIPS) is particularly short, which can be attributed to high demand for appliances and other household products and single use products.
Polybutylene terephthalate (PBT) buyers are bracing themselves for increases higher than €1,000/mt from Q1 to Q2. The market is extremely short, suffering from low imports and availability issues of butanediol (BDO). PBT prices are set to increase by a substantial amount because of the shortage of supply and higher prices of BDO.
Polypropylene (PP) availability has turned critical for many buyers, with some having to shut down production over the Easter holidays because of the lack of raw materials. Buyers are facing a twin blow of reduced supplies and high prices. Spot homopolymer prices are close to €2,000/mt, while contracts are expected to jump from March to April by €200-250/mt.
The root causes of high prices and low availability across the polymer industry can be traced back to the distortions created by the pandemic, not only in Europe but globally. And it is plausible to expect a slow return to normality, and that things may deteriorate before improving. This is especially pertinent for PA, PC, and PP, where there is little to suggest that buyers could soon face better availability and lower prices. The current state of the market could remain in place until the summer, and possibly for the rest of the year, following the same trajectory as the pandemic.