27 May 2009 11:52 [Source: ICIS news]
“This increase is necessary to preserve sustainable margins and to ensure our innovation programmes,” said Lorenzo Delorenzi, executive vice president polyolefins.
The announcement came soon after the initial settlement of the June monthly ethylene contract price at €705/tonne FD (free delivered) NWE (northwest ?xml:namespace>
The monthly propylene contract was not settled for June, and discussions were strained.
“I don’t think demand is there to justify an increase,” said one PE market observer.
“They might get the €20/tonne from ethylene if they push really hard, but they will have a struggle getting any more,” said a large polyolefins buyer.
PE prices had slipped in May as European demand remained very weak. PP prices largely rolled over.
Low density PE (LDPE) prices eased back by €10/tonne to €890-900/tonne FD NWE on a gross monthly basis, while the spot market showed a much more nervous disposition, moving well below €800/tonne FD NWE net in May.
PP homopolymer injection prices sat around €780/tonne FD NWE, on a gross basis.
The European polymers market continued to be supported by strong export volumes.
“We have had our best month ever for exports,” said another polymer producer who would soon be deciding on the tack to take for June business.
“The last few days have been so uncertain as far as ethylene goes that we haven’t yet decided internally what we will be looking for in June. One thing is sure is that the cracker guys are struggling and we have to get prices up.”
Oil and naphtha prices have increased significantly in May, adding to producers’ costs.
Brent crude was trading above $60/bbl, while naphtha had soared to $500/tonne CIF (cost insurance freight) NWE. This was offset to an extent by the weaker dollar but few argued that producers’ costs had not risen.
In spite of these upstream increases, however, demand in
PE demand was worse, with a reduction of volumes into double digits on most grades.
Markets globally were waiting for the arrival of new capacity from the
There was still little sign of offers of significant quantities at present, however, in spite of rumour and counter-rumour which left the market jittery.
“As a supplier with a foot in both Europe and the
At some point in 2009 players generally expected product to arrive in
“If they manage to get increases in June, it’s on the back of production cutbacks and exports, not European demand,” said another buyer.
PP and PE producers in
($1 = €0.71)
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