21 January 2010 23:59 [Source: ICIS news]
LONDON (ICIS news)--European January polyethylene (PE) pipe resin contracts showed gains of €40-50/tonne ($56-70/tonne) on higher feedstock costs and limited availability, despite seasonally slow demand, industry sources said on Thursday.
Black high density PE (HDPE) 100 prices were assessed up by €40/tonne from December at €1,100-1,170/tonne FD (free delivered) NWE (northwest ?xml:namespace>
Meanwhile, black HDPE 80 and black medium density PE (MDPE) 80 commanded a slight premium of plus €50/tonne due to tight supply, leaving January contract prices at €1,125-1,195/tonne and €1,160-1,240/tonne FD NWE respectively, according to global chemical market intelligence service ICIS pricing.
However, a number of players could not rule out further increases towards the end of the month as pressure from the upstream ethylene market continued to erode producers’ margins.
“The margins are driving the price direction; it is a cost discussion,” said one buyer, who felt that further hikes could be possible. “The adverse weather is really holding price increases off at the moment. When the snow goes, so does our argument to keep prices low.”
This was echoed by a seller who noted that sales, particularly to central and eastern Europe, were languishing below estimates due to the snow: “There is hardly anything moving to
However, some sellers were resolute that they would offer increases of €100/tonne and no less for January business, citing unsustainable margins and the need to recoup losses as justification for the higher prices. As such, a wide spread of offers was emerging.
“There’s a real spread of prices at the moment,” said one reseller. “Some producers’ black HDPE 100 offers are above €1,200/tonne because of higher increases, but others are still selling below €1,100/tonne [FD].”
A major supplier, who conceded that the full targets of €100/tonne might not be possible in early January, continued to express frustration with those offering hikes of just €40/tonne: “A €40/tonne increase is not enough; we need to target increases of at least plus €50/tonne in order to cover variable costs. We will be aiming for a total €60-80/tonne to ease margin pressure by the end of the month.”
($1 = €0.71)
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