10 January 2006 11:32 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS news)--The European polyolefins industry has started the New Year in a more positive mood than was expected at the end of 2005. Polyethylene (PE) and polypropylene (PP) have stabilised in January and producers are confident of an upturn in pricing during Q1.
2005 was a year of two distinct halves for PE and PP in ?xml:namespace>
Low density (ldPE) prices began the year high at Euro1,190/tonne FD NWE (free delivered NorthwestEurope), but fell sharply to Euro830/tonne FD NWE by June. July saw an immediate upturn and prices rose steadily into November, reaching Euro1,290/tonne FD NWE, close to a record high. A slow market in
High crude oil and naphtha prices, coupled with strong demand in emerging regions, particularly
European demand was flat in 2005, and 2006 is only expected to grow at modest levels.
Two new capacities in
European ldPE prices January-December 2005
Commoditisation is another feature of this market which will loom larger in the near future, particularly in high density (hdPE) and linear low density (lldPE) as
Last year saw the launch of the London Metal Exchange’s (LME) plastics futures trading. Reference prices have recently moved closer to the physical market after sometimes straying some way apart from them during 2005. Financial markets in particular have shown a keen interest in the new LME product and polyethylene terephthalate (PET) is due to be added to the plastics futures portfolio in 2006.
A response to the recent poor performance of chemicals markets has been the sale of two polymer industry giants, Basell and Innovene (a spin-off of most of BP’s chemical portfolio). Basell was bought by Access Industries, while Ineos - Innovene’s buyer - was already established in the chemical industry. Many players expect a tougher stance from such producers in the future as they are forced to improve margins.
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