Europe PE pipe prices trend up, producers miss targets

10 February 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--European polyethylene (PE) pipe grade resin producers fell short in their bid to push their full targeted increase of €50-100/tonne ($68-137/tonne) through to buyers in February, as adequate availability and lacklustre demand capped the potential increase, sources confirmed on Thursday.

Prices gained an average of €35/tonne, leaving black high density PE (HDPE) 100 resin values at €1,355-1,375/tonne and black HDPE 80 at €1,365-1,400/tonne according to ICIS. 

Both were assessed on a free delivered (FD) northwest European (NWE) basis and are subject to discounts and rebates.

Although this movement was €10/tonne above the plus €25/tonne ethylene settlement, many producers expressed frustration with the outcome of talks.

“Buyers have a lot of options when it comes to purchasing material and there are those manufacturers who are keen to keep their market position,” one producer noted. “I do not see any reason to offer below €50/tonne in February though as there is no pressure to sell and it will not stimulate any more demand.”

The source went on: “Our margins are nowhere near what they should be. HDPE pipe is a speciality grade but the commodity grades [such as blow moulding, injection and film] are giving us better margins at the moment”.

This was echoed by a second seller, who reiterated that PE pipe manufacturers had yet to recoup the losses made in the final months of 2010, when ethylene prices had begun their steady uptrend, outpacing movements in the PE pipe market.

For the majority of consumers, however, hikes above €35/tonne were not acceptable given the ample availability and slow demand in the market.

One pipe converter noted: “February is a very bad month with low volumes [sold into end use markets] and no margins anymore. We are buying the minimum as our stocks are high.”

A second noted that despite the recent force majeure declaration from INEOS at Lillo in Belgium - which has the potential to hit availability because approximately half of the production at the site is HDPE pipe, according to a company source - it would able to secure additional material from other suppliers if necessary at no extra cost.

($1 = €0.73)

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By: Stephanie Wilson
+44 20 8652 3214

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