Dow targets €70/tonne increase on Europe polyethylene in June

21 May 2010 11:46  [Source: ICIS news]

LONDON (ICIS news)--Dow Chemical has announced a €70/tonne ($86/tonne) increase on all its polyethylene (PE) grades across Europe, the Middle East, Africa and India, the company said in a statement on Friday.

No reason was given for the proposed price hike.

Low density PE (LDPE) prices had risen by almost €300/tonne already in 2010, and was now trading at €1,250-1,280/tonne FD (free delivered) NWE (northwest Europe) in May on a net basis.

The direction for PE proposed by Dow for June was in sharp contrast to the Asian PE situation. Prices in Asia were falling, with drops of $60-120/tonne seen this week.

Lower crude oil and naphtha prices, coupled with concerns over the effect the European debt crisis would have on the global economy, led to nervousness in PE markets globally.

The decline in the euro against the dollar had served to tighten the European PE market further, however, as imported material became less freely offered.

“I am really concerned that I won’t be able to get hold of all I need in the next couple of months,” said one large PE buyer. “We have been expecting lower prices for months, but it wouldn’t surprise me if we have to wait until the end of the year now.”

Producers were bullish over the direction of PE pricing in June. One argued that, while Asian PE Prices were currently experiencing downward pressure due to weaker oil prices, fundamental demand was strong and prices would rally when buyers realised product was not freely available.

“June will be the biggest slam dunk [easy win] of the year,” the producer said, referring to the PE business in Europe. “If LDPE buyers don’t want to accept increases, they don’t have to buy.”

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

($1 = €0.81)

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By: Linda Naylor
+44 20 8652 3214

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