Europe polyethylene sellers target price increases for May

21 April 2010 12:35  [Source: ICIS news]

LONDON (ICIS news)--Polyethylene (PE) buyers in Europe are to face yet more price increases this year after already accepting hikes totalling up to €260/tonne ($351/tonne) so far in 2010, or an increase of 30% since January, as producers have announced higher prices for May, sources said on Wednesday.

Dow Chemical said it would be seeking a €70/tonne increase in the price of low density PE (LDPE) in May and a €50/tonne hike in linear low density PE (LLDPE) and high density PE (HDPE), compared with its prices in April.

SABIC said it would be looking for a €60/tonne hike in the price of LDPE and a €40/tonne increase in LLDPE.

The Saudi petrochemical major added that it was waiting for the May ethylene contract to settle before announcing plans for HDPE.

LDPE prices were trading at €1,220-1,250/tonne FD (free delivered) NWE (northwest Europe) on a net basis in April.

“We will be looking for an increase of around €50/tonne on LDPE,” said another producer, “based on a rollover in ethylene.”

Although discussions for the May ethylene contract have not yet gotten seriously under way, several sources from PE producers said they expect little change in the price level of €960/tonne FD NWE that was settled for April.

Buying sources pointed out that PE producers had managed to recover the €20/tonne hike they took in the April monomer settlement, and more in the case of LDPE and LLDPE, adding that they did not see a reason for producers to seek higher prices yet again in May.

“I cannot believe it,” said one LDPE buyer. “This is pure profiteering now. There is no other way to describe it.”

“This will stop growth in plastic packaging,” added the buyer. “Already some major investment is no longer moving away from paper to plastic because of the volatility in these markets.”

Another buyer asked: “Who is taking these announcements seriously?”

LDPE availability in Europe was still tight, however, in spite of some evidence of easing in some sectors.

Several sources confirmed that the current tightness of PE in Europe was the result of cutbacks in production, rather than any fundamental strength, in spite of an upturn in March and April volumes.

“Why wouldn’t we go for another increase?” said one of the producers. “Product is tight, so prices should go up.”

May discussions would not begin in the PE market for some days.

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

($1 = €0.74)

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By: Linda Naylor
+44 20 8652 3214

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