Europe April PE price ideas remain mixed as buyers are cautious

12 April 2010 17:51  [Source: ICIS news]

LONDON (ICIS news)--Buyers of all grades of European polyethylene (PE) are cautious as players in discussions over April pricing in some sectors haggle over small increases, while producers in other sectors are able to secure higher prices due to tight availability, market sources agreed on Monday.

Low density PE (LDPE) and linear low density PE (LLDPE) prices were widely accepted to be increasing across the board, according to market sources.

A couple of LDPE producers had already stopped fresh sales for April and reported that buyers have been eager to place May volumes for fear of not being able to get hold of all the mateiral they need next month.

LLDPE sellers said they were also pushing increases onto the market with relative ease, as seasonal factors affected demand.

“We are in a situation where demand is higher than offer. It’s simple. In cases like this, prices increase,” said one seller.

Buyers admitted that they would have to pay more in April, but some did not confirm increases of €50-60/tonne ($68-81/tonne) reported by some producers.

The level of increase in monthly business was difficult to determine so early in the month, as many LDPE buyers only settled the price at the end of the month, on a retroactive basis.

There were reports that some LDPE buyers had been able to buy for April at an increase of €30/tonne from March, depending on if they settled earlier than usual.

“We have done a few sales at plus €30/tonne,” said a producer, but others were adamant that it was plus €50/tonne for April or there would be no deal.

“Low density is a done deal at plus €50/tonne,” said another producer.

Net LDPE prices were around €1,220-1,250/tonne FD (free delivered) NWE (northwest Europe) in mid-April.

LLDPE prices tended to follow LDPE, with more increases toward the lower end of the scale, but a tight market nevertheless ensured price rises.

The situation was more complicated when it came to high density PE (HDPE), as sellers with diverse agendas approached the separate sectors differently.

HDPE blowmoulding buyers reported offers of between a rollover from March and an increase of €20/tonne, to cover the increase in the April ethylene price. One major blowmoulding producer, however, reported business at increases of €30-50/tonne over March, however.

“In all my discussions so far for April, I have been offered nothing more than the [plus] €20/tonne of the ethylene hike,” said a large buyer.

The situation was far from settled, however, and discussions were expected to go on for several days before the month’s prices were decided.

On the HDPE spot market, prices were easing back as demand was flat and imports affected the market.

Net prices of €1,080/tonne FD NWE, which were offered for European HDPE blowmoulding in March, were no longer valid, and prices were down to €1,030-1,040/tonne FD NWE, with some special imported grades bid below €1,000/tonne FD NWE.

Producers said they saw no reason to reduce monthly contract prices, however.

“A reduction is simply not part of the equation,” said one of the producers. “We have plenty of export opportunities to send product to if European buyers don’t want it.”

Buyers of all grades of PE were cautious in approaching the market. LDPE prices had already risen by over €250/tonne in 2010. At some point this year, buyers said they expect prices to fall.

Inventories were low across the board, according to both buyers and sellers.

HDPE blowmoulding is used to make bottles for the dairy and hygiene industries. LDPE and LLDPE are mainly used to produce film for the packaging industry.

PE producers in Europe include Borealis, Dow Chemical, INEOS, LyondellBasell, Polimeri Europa, SABIC and Total Petrochemicals.

($1 = €0.74)

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By: Linda Naylor
+44 20 8652 3214

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