18 March 2011 11:31 [Source: ICIS news]
LONDON (ICIS)--Escalating polyethylene (PE) prices in Europe are leading to offers of imported product from ?xml:namespace>
“We are being offered product at €1,250/tonne DDP (delivered, duty paid),” said one large high density PE (HDPE) buyer.
With current net HDPE injection prices at €1,320-1,340/tonne ($1,859-1,887/tonne) FD (free delivered) NWE (northwest Europe), €1,250/tonne was not such an attractive proposition, as the lead time was six weeks.
Offers of linear low density PE (LLDPE) commodity C4 grades were also heard.
“Yes, there have been offers of product, but at $1,700/tonne CFR (cost and freight), it doesn’t leave much room for margin,” said a potential buyer.
LLDPE C4 net prices were trading at €1,330-1,340/tonne FD NWE mid-March. Imported product would have a duty of 6.5% imposed on it upon arrival in Europe, and with €40/tonne costs to be taken into account, plus a six-week lead time, this offer involved some risk.
On the other hand, producers saw PE pricing going only one way in April, and even beyond.
Much of the PE market was on hold following the successful implementation of increases on most grades and in most regions in March, as players waited for the new April ethylene monomer settlement which would give some direction to the PE market next month.
Monomer sources were loath to predict what might happen as volatility upstream, exacerbated by the situations in Japan and Libya, was extreme.
Late on Friday morning, Brent crude oil was trading at $115.60/bbl, up from its Monday 14 March level of $112.10/bbl. Friday’s news concerning military action in Libya led to expectations of further upward moves by many PE sources.
Any upward move in the April ethylene contract was expected to be transferred on to the PE price, but the situation was very unclear.
PE prices had been rising consistently for many months, and high prices were having an effect on demand, particularly at smaller and medium-sized accounts.
LDPE prices were now at a record high, trading above €1,500/tonne FD NWE in some cases.
HDPE pricing, which had been weak for many months, and was not far from the price of the ethylene contract in mid-2010, saw an upward leap in 2011, but had still not reached the peak it saw in summer 2008, when crude had traded briefly at $147/bbl. Prices had increased sharply in 2011, however, and buyers were forced to pay hefty hikes.
PE is used widely in the packaging and household goods sector.
($1 = €0.71)
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