SABIC targets €80/t hike on Europe June PE grades

22 May 2008 13:39  [Source: ICIS news]

LONDON (ICIS news)--SABIC is targeting a €80/tonne ($127/tonne) increase on its low density polyethylene (LDPE) and linear low density PE (LLDPE) sales in June in an effort to boost marhin, a company source reported on Thursday.

“We are facing negative margins in some cases. This just cannot continue,” said the source. “There is strong pressure for an increase in third-quarter ethylene.”

One large buyer said that it would not be paying any increase next month, while another acknowledged that upstream costs were unprecedented and that higher prices might be forced on the market.

Dow Europe had already announced an increase of €150/tonne on all PE for June.

“PE will have to be cut back before a significant increase takes place, though," a buyer said. "There is no shortage of supply and I can’t see buyers accepting massive hikes when they can get hold of all they need.”

June business was still far from being discussed, and in some case May prices were not yet settled.

One effect that this week’s new price surges on naphtha and oil had was to stem most of the erosion in May pricing.

LDPE prices had eased back by around €20/tonne, leaving gross monthly prices just below €1,300/tonne FD (free delivered) NWE (northwest Europe).

Spot buyers were also scrambling for material and levels were now above €1,200/tonne FD NWE.

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

($1 = €0.63)

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By: Linda Naylor
+44 20 8652 3214

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