FocusEurope polymers rise but volumes down

14 January 2008 16:58  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS news)--Polyethylene (PE) and polypropylene (PP) prices are moving up in Europe in January, but some sellers report slow demand as producers aim to pass on their respective upstream monomer hikes, market sources said on Monday.

PP was generally perceived to be less firm than PE, and buyers did not expect to be paying anywhere near the full €57/tonne ($84/tonne) increase in Q1 propylene.

The ethylene increase of €78/tonne was reported covered in some cases of January PE business, but most buyers expected to be paying less than the full monomer hike.

“Demand is not bad, but it certainly isn’t scintillating and I can’t see us achieving targeted volumes this month,” said one PP producer.

“Demand isn’t as good as we had hoped. C4 [linear low density PE - LLDPE] volumes are strong, though, but it doesn’t look as if we will fully cover the ethylene increase in January,” said a PE producer.

C4 LLDPE was widely considered to be the strongest of all PE grades in January. Low density PE (LDPE) and high density PE (HDPE) blowmoulding grades were also seen as strong.

Some PE buyers admitted that they had not been able to secure volumes at less than plus €70/tonne, while others who had not yet settled for the month hoped for less.

“We aim to take around €50/tonne [increases] for our PE this month,” one large buyer said on Monday.

It was not sure that plus €50/tonne would be available for January, however, as most producers were still aiming for more.

Although the PE supply-demand balance was in producers’ favour, the PP situation was perceived differently by most buyers.

“There is no shortage of material,” said a PP buyer on Monday. “OK, we are paying higher prices because there is no way of avoiding it, but I have not had any difficulty getting hold of product and I don’t know anybody who has.

Polyolefins sellers were determined to cover their full costs.

“We will continue to push for increases in February if we don’t get all we need in January,” said one major PE producer. “We lost margin in the fourth quarter of 2007 and we have been paying higher monomer costs since 1 January.”

LDPE prices were trading close to the mid-€1,300s/tonne FD (free delivered) NWE (northwest Europe), and PP homopolymer prices were moving up towards the €1,300/tonne FD NWE mark, according to global chemical market intelligence service ICIS pricing.

Polymer producers in Europe include SABIC, LyondellBasell, Borealis, Dow, INEOS Polyolefins, Polimeri Europa and Repsol.

($1 = €0.68)

By: Linda Naylor
+44 20 8652 3214

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