13 January 2011 23:59 [Source: ICIS news]
LONDON (ICIS news)--European polyethylene (PE) pipe grade resin January contract prices surged by €100/tonne ($132/tonne) as producers remained firm in their bid to pass upstream increases through to buyers, market sources confirmed on Thursday.
The movement left black high density PE (HDPE) 100 material at €1,320-1,340/tonne, while black HDPE 80 contracts were pegged at €1,330-1,360/tonne FD (free delivered) NWE (northwest Europe), subject to discounts and rebates according to ICIS.
The increase did not come as a surprise to many market players, who had been expecting a similar movement to that seen in the upstream ethylene market, where January prices surged by €105/tonne to reach €1,110/tonne FD NWE.
However, there was vehement resistance to increases above €50-70/tonne from a few buyers who were yet to settle. These consumers argued that ample availability and the traditionally slow demand for pipe grade resin in January did not support producers in their bid to raise prices above €50-70/tonne.
“There’s plenty of availability in the market and the only reason we are looking to accept prices with plus €70/tonne is because the producers are inflexible in their approach to offers,” noted one pipe converter.
The source continued: “Demand is not good, and we cannot push our consumers to take the hit in January and February.”
For the majority of consumers, however, such targets were optimistic.
A large pipe converter who had settled almost 80% of its business with increases of €100/tonne commented: “They [the buyers] will not win the argument; the producers will just not sell the material [with increases below €100/tonne].”
This was echoed by a distributor who said that although its offers of plus €130/tonne had been met with no buyer interest, it could not offer below this level as it had little room to manoeuvre from its supplier.
A number of sellers forewarned that prices could climb again in February, as upward momentum in the balanced-to-tight ethylene market showed no sign of abating given the high crude and naphtha costs.
This led many to believe that prices would be stable at the very least or even increase further.
($1 = €0.76)
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