25 February 2002 00:00 [Source: ICB Americas]European polyolefin producers are taking advantage of a surge in polymers (PE) demand by pushing for big price increases.
The Dow Chemical Company an-nounced last week that, effective March 1, it is seeking an increase of á100 ($88) per metric ton, equivalent to an estimated average of around 15 percent, for its polyethylene products.
"We are experiencing re-cord demand for the first quarter in Europe, around 10 percent higher than a year ago," says a Dow official. "Supplies are so tight at the moment that we have customers for our PE product lines on allocation. There is some replenishment of inventories, but generally demand is picking up."
After telling its customers it wanted to raise its prices for both PE and polypropylene by á100 per ton this month, Basell, the European market leader in polyolefins, is now going for a further increase in March. If successful, it will have pushed up prices of some PE products by over 20 percent since January.
"We did not get the price rises we wanted this month, so we are looking for further increases in March," says a Basell spokesman. "Stocks were at an all-time low in December. Now we have to improve our margins by getting back to the price levels before the downturn of the second half of last year."
Borealis A/S has also been asking for an average rise of á100 per ton for its PE and PP products this month. But it will not be pressing for further increases next month.
John Taylor, Borealis' chief executive, urged polymer producers at a recent Chem Systems seminar in London to concentrate on value creation through close contact with customers rather than a strategy centered on low-cost commodity-based production.
SRI International estimates that while a large proportion of the current strong increase in polymer sales in Europe stems from stock replenishing, most of it probably results from growth in demand from end-user markets.
"Around 40 to 50 percent comes from stock building and 50 to 60 percent from underlying growth in demand," says Andrea Borruso, polymers consultant at SRI in Zurich.
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