Europe PE, PP sellers target April hikes in record high markets

31 March 2011 11:04  [Source: ICIS news]

LONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) producers in Europe are targeting yet more increases in April, some on already record-high levels, following the settlement of April ethylene and propylene contracts at higher levels, sources said on Thursday.

The European ethylene and propylene contract prices for April were settled on Tuesday 29 March at €1,205/tonne ($1,697/tonne) and €1,210/tonne, respectively, representing a month-on-month increase of €10/tonne for ethylene and €25/tonne for propylene.

Dow had already announced a €50/tonne increase for April PE, well before the ethylene contract settled for April, while others have begun to make their plans clear in recent days, once the ethylene and propylene contracts were settled.

INEOS will target a €50/tonne increase on all PE grades, while at least one PE producer will only be looking to cover the €10/tonne increase in the new monomer contract.

One major PP producer which did not want to be named said it would be targeting a €40/tonne increase for April, citing good demand and limited availability. PP prices are at a record high, far above the level traded when Brent crude oil reached $147/bbl in summer 2008.

Homopolymer injection net prices are now around the €1,400/tonne FD (free delivered) NWE (northwest Europe) mark, while in July 2008 they were at €1,250/tonne FD NWE. PP prices have seen a jump of just over 20% since the end of November 2010, and buyers are feeling the pinch.

“We need to get back to a normal level. People are being pushed against the wall with prices like these,” said a medium-sized buyer. “We need to get back to a level where we can all live comfortably.”

Low density polyethylene (LDPE) prices are also at a record high level, at around €1,500/tonne FD NWE, just slightly above its price in July 2008.

High density polyethylene (HDPE) producers still complain of poor margins, in spite of it increasing by as much as 25% in price in recent months. Net levels of HDPE blowmoulding are trading around €1,320-1,350/tonne FD NWE, while as recently as October 2010, some extreme cases were barely above €1,000/tonne FD NWE.

“Absolute values are still absolutely unsatisfactory,” said a HDPE producer.

HDPE blowmoulding prices in July 2008 were at €1,410-1,420/tonne FD NWE, so unlike other PE grades they are not currently at new highs.

High prices in Europe have led to offers from the USA and Asia.

“Asian [HDPE] prices are now available at $1,380-1,400/tonne FOB (free on board),” said a trader. “That’s workable today but I’m not so sure it will be in May/June.”

However, producers are confident of maintaining a strong market.

“We still believe that conditions are favourable for improving PE margins in April,” said another producer. “Availability is low and demand is good.”

PE and PP are used widely in the manufacture of packaging, agricultural and household goods and, in the case of PP, the automotive industry.

($1 = €0.71)

For more on PE and PP visit ICIS chemical intelligence

By: Linda Naylor
+44 20 8652 3214

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