03 September 2007 17:28 [Source: ICIS news]
By Nigel Davis
AT Films may not be huge – it sold 12,500 tonnes of polyethylene film products last year – but the opportunities it brings to BPI possibly are.
Stored grain is used as animal feed and increasingly as the raw material for biofuels. BPI sees a significant opportunity to expand sales of this business as global biofuels demand increases.
BPI did well in the first half in its battle against rising raw material (PE) costs. Small cost increases came every month as polymer producers struggled to maintain margins in the high raw material and energy cost environment.
Polymer pricing power in
BPI warned in May and June of the first-half impact of higher costs. Volumes were also under some pressure but the company has benefited this year from the continuation of stretch silage wrap sales into the third quarter following a wet summer in the
For a plastics converter such as BPI, however, the business environment remains challenging given the need to constantly reprice products in the face of raw material price increases.
“The rate and frequency of increases must soon abate,” BPI suggested on Wednesday, given that raw material prices are flat in markets outside
The film and bag maker reported operating profits for the first half of 2007 down 5.6% on sales 1.7% lower. First half sales fell slightly in the
The pressure on BPI’s businesses to continue to push through higher input costs though is unlikely to be relieved to any great extent in the second half.
European olefins producers are in the midst of a significant turnaround schedule involving major plants for BASF, ExxonMobil/Shell and BPRP.
Major polymer producers have tried to hike prices against a tight (ethylene) feedstock supply backdrop.
BPI says it is expecting a reasonable second-half outcome underpinned by continued sales of silage stretch wrap.
Its raw material prices, however, are likely to remain firm although the jury is out on whether producers can push through further linear low density polyethylene (LLDPE) price increases in September. General purpose film grade low density PE prices, on the other hand, could move higher given supply tightness.
The futures market is giving little away: the London Metal Exchange’s European LLDPE contract is hardly trading and current and future prices (for the next 15 months) appear fixed and at their premium over prices in North America and
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