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News

MINTEC Commodity Report April 2022

22/04/2022 - François-Xavier Branthôme
Mintec Global Packaging Index rose by 6.7% in February

The Global Packaging Mintec Category Index (MCI) rose by 6.7% month-on-month (m-o-m) and 35.2% year-on-year (y-o-y) to USD 1,899/mT in February due to soaring aluminium and paper prices. Steel prices in the US and EU continued to decline in February 2022 due to limited spot market activity and downstream demand. EU plastics prices continued their downward trend in February, falling slightly across all grades, while European paper packaging market prices remained stable for most grades.

 

Metals Market
Steel prices in the US and EU continued to decline in February 2022 due to limited spot market activity and downstream demand. However, the aluminium LME 3-month price increased due to high energy prices and output curtailments, fueling concerns about potential shortages.
The US steel hot-rolled coil (HRC) price on the CME decreased in February by 5.7% m-o-m and by 6.4% y-o-y, to a monthly average price of USD 1,084/mT. The US HRC prices continued to decline as spot market activity remained limited. However, the market appears to have reached a bottom, and there is a price reversal to an upward trend, primarily due to Russia's invasion of Ukraine at the end of February 2022. The current HRC lead times are four weeks instead of two to four weeks. The Russia-Ukraine conflict will likely lead to prolonged trade disruption and supply shortages of steelmaking raw materials in the US. 
In February, Northern Europe steel HRC decreased slightly by 0.4% m-o-m and by 29.1% y-o-y, to EUR 933/mT, due to low spot availability and high levels of uncertainty in the marketplace after Russia invaded Ukraine. The central and eastern European steel production will most likely be disrupted as some mills in the region rely on Ukrainian and Russian iron ore and coal (key inputs in the steelmaking process).
The LME aluminium (3-month) price increased in February by 7.8% m-o-m and by 54.5% y-o-y, to a monthly average price of USD 3,224/mT. The record-high prices were driven by fears over aluminium supply in the global market, following the sanctions against Russia. Russia accounts for 6% of the global aluminium supply, the majority of which goes to the EU. In addition, the gas price surge has inflated Europe's power costs and caused some aluminium production curtailments in Europe. The high-power costs are expected to fuel further rises in aluminium prices in the short term.
 
Plastics Market
In February 2022, EU plastics prices continued their downward trend, falling slightly across all grades. Similarly, prices in the US plastics market continued to decline in February for all grades except PET polymer. However, EU and US plastics prices remain elevated compared to prepandemic levels.
US HDPE and LDPE average prices continued a four-month downward trend in February, falling by 5% m-o-m to USD 2,006/mT and USD 2,447/mT, respectively, on improved supply conditions.
Likewise, the US PP average price declined to an eight-month low of USD 2,717/mT (down by 2% m-o-m). According to market sources, the surplus supply of most US polymers led to many buyers seeking to build their inventories. At the same time, sellers were not as willing to sell in anticipation that prices would rise. However, the US PET market deviated from the trend seen in the other markets in February, climbing by 3.7% m-o-m to USD 2,172/mT. This was attributable to sustained demand for this plastic as a sustainable alternative. According to market participants, logistical and supply chain challenges remained an issue hindering exports in the US polymer market during the month. This resulted in some processors and resellers buying on the spot market to bridge supply gaps.
EU HDPE and LDPE prices fell in February, down by 2% m-o-m and 1.3% m-o-m to EUR 1,818/mT and EUR 2,263/mT, respectively. Similarly, the EU PP average price declined marginally in February to EUR 1,862/mT, down 0.3% m-o-m. The EU PET average price also fell for the first time in seven months to EUR 1,621/mT, down by 1% m-o-m but remained up by 70% y-o-y. However, soaring energy, labor, and logistical costs have kept EU plastics prices across all grades at high levels year-on-year.
The Russia-Ukraine geopolitical conflict sent prices in various commodity markets into record highs in February 2022 due to shipment disruptions and supply concerns. There was, however, no severe impact on prices in the EU and US plastics market during the month. Nevertheless, market participants were on high alert for any potential disruptions to the market as Russia is a major producer and exporter of the key chemical feedstocks (crude oil and gas) required to produce plastics. This conflict would be a key watch out factor for plastic prices in the short term due to its impact on trade flows, feedstock, and other input costs.

Paper Market
European paper packaging market prices remained stable for most grades in February 2022. While there is no direct impact of the Russia-Ukraine geopolitical conflict on the European paper industry, market participants expect a further disruption in the input cost and logistics. The French kraftliner 175gr price remained stable in February but increased by 34% y-o-y to EUR 997/mT. According to market participants, several European kraftliner producers are building up inventories in anticipation of the maintenance downtime, which is likely to start between March and May 2022. In addition, the potential knock-on effects on paper supply in Europe in the event of restrictions on economic ties with Russia and ultimately a type of import restraint are also causing concerns about the future paper prices in Europe. For example, for Italy, there is about 10% of kraftliner imports originate from Russia.
Also, the French testliner 2 price was flat in February but increased by 37.1% y-o-y, to EUR 850/mT. The yearly price increase is primarily driven by brisk demand from the e-commerce sector and high production costs. No further price increases have been announced for March 2022. However, some producers are considering demanding higher surcharges given the soaring energy prices.
The February price of GD2 stayed flat but increased by 50% y-o-y, to EUR 1,415/mT, driven by strong demand (from the e-commerce and food industries), high production costs (for energy, fibre, and transport), and tight supply in the market (raw material availability). Since the production stoppages caused by the insolvency of one prominent manufacturer in Germany, the cartonboard market in Europe has become very limited. The February price of EU GC2 also stayed stable but increased by 30.4% y-o-y, at EUR 1,825/mT. Several European cartonboard producers have announced further price increases for March and April 2022.

Sources: Mintec
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