PE Pipe prices roll on balanced fundamentals

23 September 2010 23:59  [Source: ICIS news]

LONDON (ICIS)--European polyethylene (PE) pipe grade resin domestic prices largely rolled over in September, despite efforts by producers to capture the upstream ethylene movement of plus €10/tonne ($13/tonne), market sources said on Thursday.

Balanced demand and supply had supported buyers in their bid to avoid hikes, and a number of suppliers noted that some aggressive selling seen earlier in the month and the marginal movement of ethylene prices had largely undermined the potential to increase.

As such, black high density PE (HDPE) 100 and 80 pipe grade resin prices were assessed steady at €1,190-1,250/tonne and €1,210-1,260/tonne FD (free delivered) NWE (northwest Europe) respectively, according to ICIS.

However, there was some regional variation at play, as consumers in the stronger markets of Italy, Germany and Poland were faced with hikes of €10/tonne at their lower priced accounts:

“We have concluded two of our negotiations at a rollover and had to accept a plus €10/tonne [on the third] in order to bring it in line with the market,” one large converter said, before adding: “We have fought for the lowest price possible because it is almost impossible to pass the increases on to our consumers. We are the ones absorbing the hike.” 

Elsewhere, lacklustre demand in Iberia and southern France had led to some reductions of €10/tonne, according to several players, who noted that buying interest had yet to rebound significantly following the traditional summer lull, sources said.

A large converter with operations in Iberia outlined that its domestic off-take in September remained some 25% below its July levels, adding that; “the Spanish market remains very depressed and this will probably be the case until the end of the year.”

Looking ahead, many producers were yet to announce their October price ideas as much would depend on the movements in the upstream monomer market and the strength of demand going forward.

However, there was a general expectation that prices would remain steady as both the upstream ethylene market and supply of HDPE pipe grade resin looked to be largely balanced. 

One Asian producer reported that gross offers of €1,200/tonne FD NWE had been heard from a number of Middle Eastern and European manufactures who were aiming to hold prices steady, but as yet, there were no official offers heard in the market.

Despite this, with the Chinese market now slowing down ahead of the national Golden Week holiday and the euro gaining ground against the US dollar, there was an increasing threat of imports and limited export opportunities. 

“The export markets have given a good outlet for European material, but the weakening dollar could prove favourable for those looking to import [into Europe]," one trader said.

($1 = €0.75)

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By: Stephanie Wilson
+44 20 8652 3214

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