European Polyethylene and polypropylene prices could see sharp rises in March as war breaks out in eastern Europe

Spot market saw a rise in prices of all grades of HDPE and LLDPE while the prices of LDPE blow moulding and film grades saw a depreciation in prices week-on-week in the third week of February. Polypropylene homopolymer price rose due to improved demand and higher raw material costs, copolymer market witnessed a mixed trend with price of Block copolymer showing a week on week decrease while price of random copolymer showed an upward trend mainly owing to stable demand.

Price of Monomers rose owing to upstream cost pressure. Naphtha rose by more than USD .04/kg since the first week of February which led to a corresponding rise in prices of monomers ethylene and Polymer grade propylene (PGP). Spot PGP for the third week was assessed at Euro 1300/MT on an FD Hamburg basis while the ARA import price was benchmarked at Euro 1250/MT on a CIF basis. Ethylene prices too were on an uptrend with spot offers heard at Euro 1100/MT on an FD Hamburg basis.

ICE Brent and WTI benchmarks breached the USD 100 per barrel mid- 4^th week of February as Russia stormed into eastern Ukraine during the early hours of 24^th February. Liquified Natural gas import prices too showed a week on week increase of USD 1.26/MMBtu to settle at USD 25.72/MMBtu by the close of the third week of February. Monomer prices could see further sharp increases in the month of March in Europe considering the volatility in the geopolitical scenario of Europe. War could lead to a general rise in demand and could lead to increase in prices of commodities in the month of March and perhaps continue through to April.

Resin prices in general are expected to witness higher cost pressure from the upstream monomer market as refinery spreads could come under pressure from sharp rises in feedstock crude. Future of energy security of Europe too looks bleak with Northwest Europe having to rely on large scale imports of LNG as the Russian supplies through Nord stream 1 pipeline and Yamal pipeline via Belarus could see suspended flows if NATO intervenes further in the War. Almost 40% of Europe’s Natural gas supplies come from Russia. With the news of Germany suspending the Nord stream 2 pipeline project, Europe’s energy balance  could see further deterioration in the coming months.