As styrene-based polymers react to market fundamentals, what is likely to happen with other polymers?
In this edition of our latest feature looking at the key issues that influence polymer prices, Mike Boswell assesses how the markets are reacting to a diverse range of factors, from oil prices and shale gas availability to the UK’s snap general election.
What now appears to have been a spike in styrene-based polymer pricing based upon short supply of styrene monomer now over, and given that styrene-based polymers are generally in a state of good supply, prices are now falling away, giving welcome relief to hard-pressed processors.
From the graph above it is clear that the spot price for Benzene and Styrene Monomers have acted as lead indicators. So, as oil prices start to soften what is now in store for other polymers?
The combined graph below also appears to indicate that other spot markets for feedstock have started to move downwards.
However, it is important not only to consider the supply/demand fundamentals for the feedstocks, but also for the polymers they themselves create. Interestingly, these market forces can act not only on broad polymer categories, but also at even a polymer type, grade or application level. To some extent this is visible in the polyolefins market with increasing evidence that PP will become increasingly detached from PE as the availability of C3 changes with the advent of shale gas-based PE. Furthermore, markets can act quite differently depending upon grade, with often significant variance in fundamentals between the relative niche injection moulding and the high-volume grades for extrusion processes including film, sheet and blow moulding. On this basis it is possible that polyolefin pricing, at least in the short-term, may have a diversified reaction to the reduced input prices.
The engineering polymers market also contains an interesting combination of some feedstock-based deflationary pressure and also at a polymer type level significant differences in terms of supply/demand balance. The polymers that are in plentiful supply, and therefore likely to succumb to feedstock pressure, include PC and POM.
Whereas PMMA, PA6 and PA66 are in a situation of extremely tight supply and are likely to remain so throughout 2017, which is likely leave buyers having to contend with both difficulty in securing supply and the likelihood of further sharp price increases.
Given that for the UK polymer pricing is typically USD or Euro denominated the recent increase in value of the GBP following the snap General Election to take place on June 8th will relieve some of the effects of devaluation following the BREXIT decision at the end of June last year.
What remains to be seen is what further impact the election result will have, although given the likely outcome the financial markets will have already factored this in.
It certainly looks like an interesting time ahead in terms of polymer pricing, with influence from a diverse range of factors.
Who is @polymerman?
Mike Boswell is Managing Director of UK materials distributor, Plastribution, as well as the Chairman of the British Plastic Federation’s Polymer Compounders and Distributors Group and its ‘BREXIT Committee’. He has a broad knowledge of both materials and the issues affecting the wider industry, with over 20 years experience in the field. @polymerman is the title used for announcements made via his Twitter account.