24 March 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--Producers in the European polyethylene (PE) pipe grade resin market successfully passed upstream hikes of €60/tonne ($85/tonne) through to buyers in March, but fell slightly short of their targeted plus €80/tonne, as ample availability and competitive selling continued to cap the potential increase, sources said on Thursday.
Both black high density polyethylene (HDPE) 100 and 80 pipe grade resin values gained €60/tonne, in line with the March ethylene movement, to trade at €1,415–1,435/tonne and €1,425–1,460/tonne FD (free delivered) NWE (northwest Europe), respectively, according to ICIS data.
Although many producers had begun the month outlining the need to recoup at least the ethylene settlement, most were optimistic that an additional €10–20/tonne would be achievable on rising upstream crude and naphtha costs, attributed to the situation in Libya and the turmoil in North Africa and the Middle East.
Several said that increases above the ethylene movement were necessary in order to firm PE pipe grade resin margins, recover losses made at the end of 2010 and close the gap between surging commodity grade HDPE margins and those of pipe, which were lower than expected.
“It is going in the right direction,” a major PE pipe producer said, referring to the €60/tonne increase. “Margins on pipe are not doing so well, so the settlement is disappointing but not unexpected."
“Demand is still quite slow and we are still seeing these aggressive offers from one or two producers,” the source added.
It was ample availability and competitive selling that had hindered the bid to increase above €60/tonne, according to the majority of sources.
“There are no good margins for producers, that is clear, and we had expected €10–15/tonne above the ethylene at the beginning of the month because of production issues, but there was no difficulty finding product and most were ready to accept the plus €60/tonne by mid-month,” said a large converter.
There were some variations, as one buyer said that it had agreed to hikes of up to €70/tonne, but added that it was starting from lower-priced contracts, while a seller was adamant that it had still to conclude some negotiations and would not drop its offers below plus €80/tonne, as it was under no pressure to sell.
($1 = €0.71)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections