25 June 2008 15:54 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS news)--Polyethylene (PE) buyers in Europe expressed their concern and frustration at proposed price hikes for July which they claimed went beyond the increase in upstream costs, several said on Wednesday.
“Dow is talking about €150/tonne ($234/tonne) for July. That is on top of its June hike, which for us averaged out around €80/tonne. This is going way beyond the increase it has had in costs,” said one large PE buyer.
“It is trying to get more margin at the expense of everybody else,” said another.
PE has increased significantly since the early millennium and reached new record highs on a regular basis.
Low density PE (LDPE) has moved from its low point of €620/tonne FD (free delivered) NWE (northwest ?xml:namespace>
The comparison does not show the whole cost picture, but it does demonstrate how quickly and relentlessly costs have risen.
Dow pointed out that there had been no change to this picture so far in 2008.
“For the first half of 2008, our feedstock and energy costs are up more than 40% compared with the same six months of last year,” the company said in a statement on Tuesday.
“Dow will raise the price of its products by as much as an additional 25% in July in an effort to offset the continuing relentless rise in the cost of energy and hydrocarbon feedstocks.”
Other producers had not yet made their July ambitions clear but a higher ethylene contract price for the third quarter was looking increasingly likely as discussions progressed.
One major monomer seller reported that buyers were moving close to sellers’ ideas, suggesting that the quarterly contract, now at €1,038/tonne FD NWE, could increase by well above €100/tonne.
PE would inevitably follow any increase in third-quarter ethylene, players said.
“We sympathise with our converters,” said another major European PE producer, “but we have no choice. We can’t swallow such increases.”
PE prices were expected to remain strong in Europe but a wave of new production from the
Much depended on how demand fared in the key
PE suppliers in
($1 = €0.64)Click here to find out more on the European polyethylene margin report
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