november 2016 - plastribution€¦ · course overview the polymer supply chain is complex and ......

November 2016Pressure continues to build on polymer pricing as feedstock prices firm and Sterling continues to weaken; but for now there is still the uncertainty factor to contend with.

0845 34 54 560www.plastribution.co.uk

1www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected]

Plastribution Training

Over the last 10 years nearly 500 candidates from approximately 120 different companies have attended Plastribution’s popular training courses.

The sharing of its technical ‘know-how’ is a fundamental element of Plastribution’s commitment to service excellence and this is reflected in the training courses available and the depth of the content covered.

Aimed at advancing the knowledge and skills of its customers’ process technicians and production, commercial and supply chain management, the courses are free and very well received.

In an increasingly competitive global plastics market, we are obliged to make our contribution to training a world-class UK plastics workforce.

Mike Boswell, Managing Director, Plastribution

training


Process Optimisation

This is a 3-day course which combines theory with practice in meeting the needs of the processor wishing to obtain high levels of accuracy and productivity from their production facilities.

Appropriate candidates for the course are experienced process technicians and engineers responsible for carrying out mould tool trials and trouble-shooting in order to improve productivity.

Injection Moulding for Non-Technical Staff

This is a 2-day course which aims to provide candidates, who most likely have a commercial or non-technical background, with a general understanding of injection moulding materials, machines and the processing of the polymers to enable them to make educated decisions when specifying and procuring materials.

The theoretical sessions, presented by Plastribution, provide a brief history of polymers and an introduction to polymer chemistry. This introduction leads on to the profiling of all the major polymer groups – by their properties and typical applications. With an eye on the

commercial benefits to be gained by making an informed choice during material selection, a practical exercise illustrates the component cost savings achievable with a more technically capable polymer, despite its relatively higher cost.

Understanding the Polymer Supply Chain

Launched in 2015, this course is a departure from some of the technical training that we have provided in the past. Its aim is to provide clarity on the economics of the polymer supply chain and to help individuals in key roles to make more informed decisions about the purchasing of polymers they use every day.

One of the key objectives of the course is to look at ways we can better interpret and sift the vast amount of information that the internet and industry media push to us, and to explain some of the terminology that we all use every day but don’t fully understand.

It has been designed to help customers better utilise the benefits of polymers to increase efficiency within their own business, but also help them win and attract new customers.

Bespoke Courses

In addition to the planned off-site courses that Plastribution run during the year, the training team also organise a number of bespoke courses held on customers’ own premises. These courses are increasing in popularity and, location wise, have covered every corner of the UK.

Courses training


Invite training

You are invited to join us on our new course

Understanding the Polymer Supply Chain

To book a place on the course contact Duncan Scott

+44 (0)7768 716227 [email protected]+44 (0)1530 560560 www.plastribution.co.uk

Course overviewThe polymer supply chain is complex and subject to many variables.

Understanding those complexities will enable the candidates to make informed and better strategic decisions for their business.

Will include presentations from key Western European producers.

Typical content• Introduction to the petrochemical industry• Why polymers cost what they cost• Basic petrochemical economics• The polymer building blocks• The ‘Shale Gale’• Green Polymers• What is happening in the polymer

market now?

This course would suit…Individuals in senior purchasing roles and those who are making strategic decisions within their business.

CostsThere is no cost for the course, however candidates will need to arrange travel and hotel accommodation.

An evening meal will be arranged and provided by Plastribution.

AccommodationCandidates need to book their own room at the Bosworth Hall Hotel.

We have negotiated a special deal - please ask for the ‘Plastribution’ rate.

For more information please contact: [email protected]

Course Duration• Day 1: 12 noon – 5pm• Day 2: 9am – 2pm

DressCasual business attire.

Dates

8th & 9th Feb 2017

Location

Bosworth Hall Hotel, The Park, Nr Nuneaton, Market Bosworth, Warwickshire CV13 0LP

2www.plastribution.co.uk Tel: +44 (0) 1530 560560 Email: [email protected] and feedstock price data provided by PIE. www.pieweb.com

Welcome to price know-how

A monthly publication looking at key factors that affects UK polymer markets.

Price Know-how Glossary

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.

Whilst some price surveys currently exist they are often difficult to interpret, use foreign currencies, and differing units of measure. Price know-how aims to be relevant by providing an overview, material group specific reports and more general economic information including exchange rates and GDP growth. To keep things relevant the report is in £ Sterling with tonnes as the common unit of measure.

The objective of the report is to form the basis of discussion about issues such as pricing and availability and so be a basis on which to consider purchasing strategies.

It is also believed that the report will support customers in explaining polymer price trends to their own customers, employees and shareholders.

As always we would welcome your feedback, and as ever your sales team is available to discuss your specific requirements.

The Plastribution Team

Monomers

C2 – Ethylene

C3 – Propylene

SM – Styrene Monomer

Naphtha

Derivative from the crude oil refining process, which is then

typically passed through a (Steam) Cracker to produce various

feedstocks including C2 and C3.

Force Majeure (non-legal definition)

Since accepting an order circumstances outside of the

supplier’s control, and which could not have been foreseen,

now prevent the supplier from fulfilling the contract either in part

or in full. By declaring Force Majeure the contract is to supply is

cancelled.


Coal Methanol Formaldehyde Acetal

Polyethylene

Polypropylene

Polystyrene

Phenol

Acetone

Styrene

Cumene

Ethylbenzene

ABS

PMMA

SBR

LDPE, HDPE, LLDPE

MTO

Olefins

Dehydrogenation Methane

Crude Oil Naptha Aromatics Toluene

Benzene CylclohexeneAdipic Acid Nylon 66

Nylon 6Caprolactam

Xylenes

Ethane

Propane

Butane

Condensate

Ethylene (C2)

Propylene (C3)

Butadiene (C4)

Butene

Natural Gas

Steam Cracking

From Hydrocarbons to Polymer

A simple diagram explaining the production routes from the major hydrocarbon sources through feedstock to the most common polymer groups.


•Political •War•Natural Disaster

•Changes in consumer markets

•Geographical shifts

in supply/demand

External Factors•Currency•Short term demand•Short term reductions in capacity•Arbitrage of Polymer•China & SE Asia supply/demand•Trader Activity

Market•Monomer Pricing Styrene Propylene Ethylene Benzene C4

Polymer Producers

Main drivers of polymer prices

•Polymerisation Margins•Inventory•Planned & un-planned outages

Feedstock

•Oil

•Gas

•Shale

•Naptha


Market Update

A presentation by Katherine White, Commercial Director Thermoplastics that comments on recent market issues, the current state of play and predictions for the coming months.

Look out for further insights every 6 months.

Click http://bit.ly/2fnCJ8g

or visit plastribution.co.uk/price-know-how

http://bit.ly/2fnCJ8g


The following graph looks at the inverse of traditional exchange rates and provides a clearer image of the inflationary pressures being exerted on the price of polymers sold in GBP. Of particular interest is the ‘Post BREXIT’ movement after June 2016. Since this period, polymer prices have remained relatively stable in US and Euro terms, and yet the levels of inflation are yet to be fully reflected in GBP polymer prices.

However, the situation in the plastics market is not dissimilar to what is happening in the broader economy, and could even be described as analogous to the more widely publicised retail sector of the UK economy, where a combination of goods in the supply chain, economic uncertainty and push back from retailers is also causing latency.

Of course, the debacle between Unilever and Tesco about Marmite has brought the public’s attention to the issues of devaluation and subsequent inflation, albeit that Marmite is of course manufactured in the UK, although some raw materials, including plastics for the caps and bottles, are likely to be imported.

Pressure continues to build on polymer pricing as feedstock prices firm and Sterling continues to weaken; but for now there is still the uncertainty factor to contend with.

USD & Euro Appreciation vs. GBP

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

Sep

t -

15

Oc

t -

15

No

v -1

5

De

c -

15

Jan

-16

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

0.950

0.900

0.850

0.800

0.750

0.700

0.650

0.600

Euro USD


To some extent, the current market dynamics are a comfort to those who in the recent times of polymer shortages have questioned the operation of the polymer market, because today it can be argued that it is indeed the fundamentals of the market that are truly dictating the price action.

There is no doubt that in due course a new price equilibrium must be found, but in getting to that point there remains uncertainty both in terms of exchanges, which could worsen or improve, and polymer prices which could decrease, remain stable or increase.

Pressure continues to build on polymer pricing as feedstock prices firm and Sterling continues to weaken; but for now there is still the uncertainty factor to contend with.

Monomer Prices (£ GBP per tonne)

Feedstock Change (Contract)

C2 (Ethylene) £26.81

C3 (Propylene) £26.81

Styrene £35.75

Benzene £5.36

Brent Crude £46.24


Polyolefins

LDPEProducers followed the feedstock announcement for October, announcing small increases in Euro terms, but the further devaluation of Sterling meant that UK prices were under considerable upwards pressure. Whilst undoubtedly the market price increased, the full extent of the currency adjustment was not fully realised. Conditions of weak demand produced strong buyer resistance.

Further feedstock increases have been announced for November, which producers have again passed on in Euro terms. It is unclear as yet whether the market will begin to reflect the full currency effects.

Whilst supply has been somewhat restricted, there remains sufficient availability to meet demand

Data provided by PIEwww.pieweb.com

LLDPEMarket prices rose in October as producers recovered the increase in Ethylene feedstock costs and also partially adjusted prices to account for the devaluation of Sterling. However, as little LLDPE is now manufactured in Europe, it seemed that some resellers were willing to sell product already in the supply chain and based on previous exchange rates.

Feedstock has again increased into October and this cost increase will be passed on. The question is whether market prices also begin to reflect the full extent of the full devaluation of Sterling.

Whilst there is sufficient supply to meet current flat demand levels, there are questions over whether the UK will be an attractive sales region due to the currency situation.

HDPEProducers followed the Ethylene settlement into October, seeking small increases in Euro prices to recover the higher costs. Feedstock costs have increased further in November and this is also likely to be passed on. However, as with the other products in the Polyethylene family, the biggest impact on pricing is likely to be currency related as the full extent of the devaluation is realised.

Supply and demand of injection moulding grades continue to be more balanced than commoditised film/blow moulding grades. Here, some producers have deals available to balance stocks before year end.

PPProducers announced increased prices in Euro terms in October in line with the increase of C3 feedstock costs. However, the value of Sterling meant additional increases in the UK, although the full extent of the devaluation was not necessarily realised.

Propylene has again increased into November and this increased cost has been passed on. Continued price pressure is expected as the UK market adjusts to the reduced value of Sterling.

Availability seems sufficient to meet demand.

Other PolyolefinsEVA availability has improved and seems sufficient to meet current demand, although there remains specific issues on certain grades, particularly those for injection moulding and with high VA contents. Pricing has followed the Ethylene feedstock settlement in Euro terms, but the devaluation of Sterling will have an impact on UK prices.

Some Plastomer products are expected to be tight until the end of the year.

Supply Supply Supply Supply

Demand Demand Demand Demand

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

£ p

er t

onn

e

Brent Crude

Naphtha Spot

Ethylene (C2) Spot

Ethylene (C2) Contract

Propylene (C3) Spot

Propylene (C3) Contract

Polyolefin Basket

Oc

t -

15

No

v -1

5

De

c -

15

Jan

-16

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

£ p

er t

onn

e

Brent Crude

Naphtha Spot

Ethylene (C2) Spot

Ethylene (C2) Contract

Propylene (C3) Spot

Propylene (C3) Contract

Polyolefin Basket

Oc

t -

15

No

v -1

5

De

c -

15

Jan

-16

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16


Styrenics

PSOctober SM contract prices fell (-€50/T), but in the UK this decrease was partly absorbed by falling exchange rates. Supply and demand remained normal. November saw an SM increase of €40/T, and some of this increase was passed on by PS producers. However, the declining £/€ rate has the largest effect on pricing. Supply and demand remain normal this month.


ABSABS prices have been steadily rising due to a combination of hikes in AN, BS and SM plus the falling £/$ rate. Supply and demand remain balanced, and as the upcoming US election could have an effect, it seems likely the steady rise will continue.

PC/ABSAs usual, PC/ABS is following the trend of ABS.

Other StyrenicsSAN and specialities such as ASA and SMMA continue to follow the price trend of Styrene monomers.

Supply Supply Supply

Demand Demand Demand

Brent Crude

Benzene Spot

Benzene Contract

Styrene (SM) Spot

Styrene (SM) Contract

Styrene Basket

£ p

er t

onn

e

£1,760.00

£1,560.00

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

Brent Crude

Benzene Spot

Benzene Contract

Styrene (SM) Spot

Styrene (SM) Contract

Styrene Basket

£ p

er t

onn

e

£1,760.00

£1,560.00

£1,360.00

£1,160.00

£960.00

£760.00

£560.00

£360.00

£160.00

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16


Engineering Polymers

PA6Indications are for stability and no dramatic changes in the short/ medium term.


PA66A similar picture to PA6. The market as a whole remains stable.

POMAs imports declined, there were a number of deals to be had at reduced pricing. In November, the situation is expected to return to normal.

PCProducers failed to get an increase through and it is unlikely that there will be any major impact on pricing until the New Year. November is considered the last full trading month of the year, so supply and demand will remain balanced.

PMMAProducers are increasing prices in the range of 4-5%. Supply and demand appears to be a fairly balanced picture.

PBT/PETThe market is stable and will remain so for the rest of the year.

Supply Supply Supply Supply Supply SupplyDemand Demand Demand Demand Demand Demand

Brent Crude

Benzene Spot (EUR/t)

Benzene Contract(EUR/t)

Naphtha Spot (EUR/t)

Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

Brent Crude




Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16


Engineering PolymersData provided by PIEwww.pieweb.com

Other Engineering PolymersThe situation for most other engineering polymers points towards stability, with supply and demand in balance.

Brent Crude




Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16

Brent Crude




Engineering Basket

£3,000.00

£2,500.00

£2,000.00

£1,500.00

£1,000.00

£500.00

£0.00

£ p

er t

onn

e

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

- 1

6

Jul -

16

Au

g -

16

Sep

t -

16

Oc

t -

16


Fundamentals

Topic Item Date % Trend

GDP Real GDP (Q on Q) Q2 2016 0.0

GDP Real GDP (Y on Y) Q2 2016 1.1

UK Output Manufacturing (M on M) Aug 0.5

UK Output Manufacturing (Y on Y) Aug 0.8

Sales New Car Registrations (Y on Y) Sep 1.6

Sales Retail Sales (M on M) Sep -0.1

Labour Unemployment Rate Aug 4.9

Prices CPI (Y on Y) Aug 1.0

Prices RPI (Y on Y) Aug 2.0

Interest Rate Bank of England Base Rate November 0.25

1. Oil Price

Oil prices have firmed on the back of a possible OPEC deal to curb production. $50 per barrel appears to be a fairly stable base.

2. Exchange Rates

The UK Brexit vote resulted in a significant revaluation of the GBP against both the Euro and USD.

The Sterling/Euro exchange rate is a key factor in determining polymer prices, since most materials are Euro denominated. At current price levels, each Euro Cent change in price represents a £10 per tonne impact on our polyolefins materials basket. The Sterling/USD exchange rate tends to be more influential on the price of ABS, PC and POM.

UK Economic DataBrent Crude Oil Price per tonne

Exchange Rates

USD per tonne GBP per tonne

500.00

450.00

400.00

350.00

300.00

250.00

200.00

150.00

No

v -

15

De

c -

15

Jan

- 1

6

Feb

- 1

6

Ma

r - 1

6

Ap

r - 1

6

Ma

y -

16

Jun

e -

16

July

- 1

6

Au

g -

16

Sep

t -

16

Oc

t -

16

Feb

– 1

5M

ar –

15

Ap

r – 1

5M

ay

– 15

Jun

– 1

5Ju

l y –

15

Au

g –

15Se

p -

15

Oc

t -

15N

ov

- 15

De

c -

15

Jan

-16

Feb

- 1

6M

ar -

16

Ap

r - 1

6M

ay

- 16

Jun

e -

16

July

- 1

6A

ug

- 1

6Se

pt

-16

Oc

t -

16

1.75

1.65

1.55

1.45

1.35

1.25

1.15

1.05

GBP vs Euro

GBP vs USD

Euro vs USD

This report is produced based upon the following fundamentals: -

• EURObasedpricingforfeedstockand polymer pricing

• ConversionofEuroandUSDbasedprices at prevailing exchange rates

• ProductbasketsweightedaccordingtoUKconsumption

AcknowledgementsWe would like to thank the following organisations for their support in producing this report: -

PIE (Plastics Information Europe) www.pieweb.com

HM Treasury www.hm-treasury.gov.uk

DisclaimersThe information provided in this report are based upon data available from both external an internal sources, and whilst care is exercised in producing this report we give no guarantee of accuracy.

Furthermore we accept no liability for purchasing decisions based upon the information provided as the petrochemical market is complex and volatile.

© Plastribution Limited. All rights reserved. 2014

Plastribution LimitedClinitron House, Excelsior Road, Ashby Business Park, Ashby-de-la-Zouch, LeicestershireLE65 1JG

Tel: +44 (0) 1530 560560Fax: +44 (0) 1530 560303

Email: [email protected]

Methodology

november 2016 - plastribution€¦ · course overview the polymer supply chain is complex and ......

Documents