Will standard polymer prices continue to soften, or is there a risk of price increases later in the summer?
Although there has been some softening in polymer prices over recent months, the easing in oil prices and monomer prices have ensured polymer producer margins remain healthy. It is notable that the significant differential between polymer and crude oil price is being maintained.
On the basis of these relatively healthy spreads, and given the lower demand associated with the summer holiday season, it would appear that any margin-enhancing-based price increase would be unlikely to succeed. Furthermore, the relatively high European price level is already providing the potential for arbitrage for supplies from Asia and the US.
The possibility of feedstock price inflation looks rather unlikely, as although oil prices repeatedly break through the $50 per barrel threshold to only fall back below this significant benchmark. On this basis, a further gradual reduction in standard polymer prices towards the end of the year looks likely.
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