Increasing Availability puts Polymer Producers’ Margins under Increasing Pressure
It is clear from the graph(s) on the right that PE and PP producers were able to take considerable advantage of the tight supply situation to significantly increase their margins. Even as PE and PP prices started to weaken in August, polymer producers started to make small concessions in excess of the monomer price reduction.
As September progresses, it is increasingly apparent that producers are both willing and able to make further concessions in the market and is anticipating that prices will continue to fall. It is likely that contract feedstock prices will drop further on the back of weak oil prices for October. It looks as if there is still some room for producers to make increased concessions until they are back to operating at more ‘normal’ margins. In fact, such is the force of the downward pull on prices, that even grades still in short supply such as HDPE Injection and LLDPE C4 film grades cannot resist the overall downtrend.
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The concept of a user friendly market report came from feedback about an article published in PRW (Plastics & Rubber Weekly) about the 2011 market outlook to which Plastribution made a significant contribution.