Plastics pricing: What a way to start the New Year, with PS and PE prices up

Just check the current poll at Plasticstoday.com and you can see that plastics pricing is near the top of processors' concerns, along with pricing pressure from customers -and that second concern often stems from customers' reluctance to pick up the tab for increases in plastics prices. Maybe the worries are justified, based on the first week of 2011, which saw prices increase for two of the largest volume plastics.

Relentless increases on Asian styrene put pressure on global polystyrene (PS) markets, according to plastics pricing service ChemOrbis (Istanbul, Turkey), which shared its insights with Plasticstoday.com. According to the service's stringers, Asian styrene prices continued their upward trend in 2011 as they gained $45/ton when compared to the last working day of 2010.

In China, import PS prices recorded additional increases during the past week as overseas suppliers elected to lift their prices by $30-50/ton in order to catch up with the higher styrene costs. Despite the recent increases, the current import general-purpose PS (GPPS) range is still traded $55-95/ton below the theoretical GPPS production, based on spot styrene prices.

Meanwhile, in Southeast Asia, PS prices also recorded increases in the import market for the same reason - the rising upstream costs pulled PS offers up. Similar to China, import sellers raised their prices by $20-50/ton in the region in order to recoup their margins. These increases caused the overall import GPPS range to gain $30-60/ton on week over week basis.

The general expectations in the global PS markets center on further increases on Asian PS prices as long as the upstream markets continue to support sellers. Asian processors are not the only ones dealing with higher prices,of course; styrenics supplier Ineos Nova (Fribourg, Switzerland) announced that prices for its GPPS products in Europe were increased by a minimum of €135 per ton effective January 1, 2011. In addition, the premium of high impact polystyrene (HIPS) versus GPPS was raised to €100 per ton, a move necessary to recover the continued cost increase of raw materials, said the supplier.  

Polyethylene (PE) prices also have moved higher in major Asian markets during the first full week of 2011, reports ChemOrbis, with sellers pointing to firm upstream costs as well as improved demand as support for their price increases. However, most buying interest was from traders and distributors last week while processors generally remained on the sidelines, with them telling ChemOrbis that they are planning to wait until the second half of the month to make their purchases, as they are not feeling confident about the demand outlook for their end products.
 
While processors remain reluctant to purchase, demand nevertheless picked up last week as traders and distributors were more active in the market, with most suppliers saying that they have been receiving a greater number of price inquiries even if sales had not yet increased.
 
In China, PE prices in both the import market and the local market moved higher last week. Import offers posted week-over-week increases of $10-50/ton as two major suppliers announced new LLDPE film offers with increases of $50-95/ton when compared with their most recent offer levels; traders also lifted their offers to the Chinese market. Most traders added that they were unwilling to conclude deals in large quantities in anticipation that prices will continue to gain ground over the short term.

Inside China, offers for domestic material posted week-over-week gains of CNY100-200/ton ($15-30/ton) for HDPE film, CNY250-350/ton ($38-53/ton) for LLDPE film and CNY400/ton ($61/ton) for LDPE film. Major domestic producers CNPC and Sinopec raised their offers by CNY100-550/ton ($15-83/ton) last week, citing their lack of inventory pressure along with higher LLDPE futures market prices as support for their price increases.
 
In Southeast Asia, import offers rebounded after losing some ground in the last week of 2010, with offers for import HDPE film rising $30-50/ton on the week while offers for LLDPE film posted relatively larger increases of $50-80/ton. Distributors in Vietnam and the Philippines announced increases of $36-201/ton on their offers last week in response to rising import prices, although producers in Indonesia and Malaysia announced their January offers with rollovers or even decreases of up to MYR90/ton ($29/ton) from December. Buying interest was said to be healthier in the region's import market while trading activity in local markets remained lackluster in the first week of the New Year.
 
PE prices also began the New Year with increases in the Indian market. Traders active in India reported that demand picked up in the first week of the new year and the local supplies have grown tighter recently on rumors that a major Indian producer managed to conclude some export deals in significant quantities last week.