FocusEurope PE sellers target higher April prices

07 April 2008 17:19  [Source: ICIS news]

LONDON (ICIS news)--Polyethylene (PE) buyers were in no hurry to settle April business, as sellers targeted higher prices in some sectors, market sources said on Monday.

 

March settlements were still fresh, as many large buyers still settle their business at the very end of the month for volumes already delivered. Most buyers saw ample availability in most grades after a period of tightness which saw prices reach record highs.

 

The current series of price hikes ended in January, after prices rose by close to the €78/tonne ($122/tonne) hike in first-quarter ethylene, leaving gross low density polyethylene (LDPE) prices well above the €1,300/tonne FD (free delivered) NWE (northwest Europe) mark.

 

Producers were now facing a €15/tonne increase in upstream costs, as second-quarter ethylene rose to €1,038/tonne FD NWE.

 

“It will be a long month,” said one major producer. “Demand for April is normal, but we are not yet seeing the pick-up we had expected after a fairly flat February and March.”

 

The fact that the month was long led some sellers to believe that the final outcome would be strong in terms of volume, as there were few holidays in April. Only Italy had a one-day holiday this month, after the Easter break had eaten into valuable business days in March.

 

LDPE prices had slipped by an average of €10/tonne in March as demand was slower than expected and buyers reported short order books.

 

LDPE was generally considered to be robust, however, and buyers expected only limited downward movement for April.

 

“I think we can push for a €10/tonne, possibly €20/tonne reduction this month,” said a large buyer.

 

Linear low density polyethylene (LLDPE) was widely regarded as the strongest of all PE grades.

 

Polimeri Europa had declared force majeure on both LDPE and LLDPE from its Dunkirk, France, unit. A fire in the cracker at the site on 19 March left both grades out of action and some hardship was being felt by LLDPE buyers who were unable to get hold of the volumes they needed.

 

This was compounded by the fact a major exporter from Saudi Arabia into Europe had only half its projected volumes for April. Buyers said there was little possibility of a price reduction in this market.

 

Only in the UK were buyers faced with feasible hikes, as the weakness of the pound sterling had left prices lagging behind the rest of Europe. LLDPE levels were moving up toward the LDPE level, traditionally traded higher than LLDPE.

 

It was in the high density polyethylene (HDPE) sector that sellers were most nervous.

 

“We will have to do our best to stabilise prices here in April,” said another major producer.

 

Inventories were higher than in LDPE and LLDPE, as demand on injection and film grades in particular had been flat during the first quarter of the year.

 

Imported dollar-based volumes were also impacting European pricing levels.

 

Blowmoulding grades were firmer than injection and film but here too buyers expected some sort of price easing in April, in spite of the higher ethylene settlement.

 

Discussions were expected to continue for some time.

 

PE producers in Europe include Saudi Basic Industries Corp (SABIC), LyondellBasell, Borealis, Total Petrochemicals, INEOS Polyolefins, Dow and Repsol.

 

 ($1 = €0.64)

By: Linda Naylor
+44 20 8652 3214

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