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EXCLUSIVE
IN OUR EXCLUSIVE ANNUAL MATERIALS REVIEW, OUR REGULAR COMMENTATOR, MIKE BOSWELL, LOOKS BACK AT 2019 AND REVIEWS A YEAR WITH MAJOR TRANSFORMATIONS, MONUMENTAL MOMENTS AND PRICE VOLATILITY IN THE POLYMER MARKETS, AND LOOKS TO THE YEAR AHEAD TO ASSESS WHETHER UK PROCESSORS CAN EXPECT THE SAME OVER THE COURSE OF 2020.
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.
Polymer raw material prices report: 2019 review and 2020 outlook
2019 REVIEW There were several factors that provided an important backdrop to price action in 2019. Firstly, slowing down of the global economy was clearly evidenced in the demand for passenger vehicles and other ‘big ticket items’, such as domestic appliances. To some extent, the US/China trade dispute influenced the diminished rate of global economic growth and appears to have significantly influenced the Chinese economy, where GDP growth remained in single figures. Here in the UK, Brexit continued to be a major influence on the economy and affected both key exchange rates. It also boosted demand in Q1, as supply chains prepared for the first Brexit deadline at the end of March 2019. The economic impact of the second Brexit deadline at the end of October was far more subdued, as skepticism mounted, and, in the case of the plastics sector, buyers took comfort from a market which appeared to be much better supplied than was the case in the first quarter. The UK General Election at the end of 2019 resulted in the GBP becoming stronger against key currency as political uncertainty was superseded by a Conservative Government with a clear mandate to “get Brexit done.” MAJOR TRANSFORMATION In comparison to the period 2015 through to 2018, the engineering polymers marketplace witnessed a major transformation, and such was the reduction in demand that even Nylon 66, which was thought to be structurally tight, became quite readily available. Whilst the graph on the right appears to show some price inflation leading up to the summer period, this effect is attributable to exchange rates and, in reality, most UK buyers of engineering polymers were unaffected as sellers wanted to avoid the risk of losing any precious volumes to competitors who might be prepared to adopt a more long-term view on exchange rates. The more commoditised engineering polymers clearly depicted the weakness of the market, and none more so than polycarbonate, where prices in Europe weakened to the extent that many Asian producers were unwilling to overcome duty and shipping costs to compete in the European market. However, the absence of these sources of supply was of no significance in a market of such abundance.
VIOLENT SWINGS Again, in the case of styrenic polymers there was a close correlation with Styrene monomer, and for Polystyrene the month-on-month price movements were typically quite violent in nature, with swings of £50 - £100 per tonne being quite a common occurrence at certain points in the year. It is notable that whilst Benzene has some correlation with Styrene monomer, the effect of Benzene prices on Styrene monomer are dampened and Benzene is not consistently either a lead or a lag measure. ABS prici ng tended to follow a similar trend to prices in the engineering polymers market.
For UK buyers transacting in GBP there appears to have been a significant increase in price volatility. However, when account is taken of GBP:Euro exchange rate variation, the underlying level of volatility is very similar to levels observed in the two prior years. It should be noted that UK polyolefin prices are primarily derived from European Euro based prices.
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