Dow Europe revises July PE pricing policy

20 July 2012 21:17  [Source: ICIS news]

LONDON (ICIS)--Dow Europe revised its July pricing policy for Europe, limiting any further polyethylene (PE) price reductions to no more than two-digits, despite a €170/tonne fall in the ethylene monomer contract price, the company said on Friday.

“We will not accept any triple digit decreases for all grades of PE for July retroactive pricing,” a source at the company said.

Retroactive pricing refers to the widespread practice in the PE market where contracts are often settled at the very end of the month instead of the beginning.

However, buyers said they would still be targeting three-digit increases even for retroactive sales, although most admit these could be capped at €120/tonne.

PE contract prices are under upward pressure on rising crude oil and naphtha prices, after producers initially gave away reductions of €170/tonne representing the full pass-through level of the July ethylene price drop.

PE price reductions for July monthly business have been cited in an unusually wide range of €70-170/tonne. Producer INEOS limited its price decrease to €70/tonne, but several competitors initially gave away the full €170/tonne drop from the July ethylene monomer contract, before backtracking and closing the bulk of their deals at reductions of €100-140/tonne.

Sentiment remains bullish on high crude oil prices, plus a combination of restocking and pre-buying which has propped up demand.

Meanwhile, European spot PE prices have been on the rise on short supply as many producers closed their July order books.

Spot PE prices rose this week on the short supply and price hikes in crude, with traders citing an increase of €40–50/tonne for low density polyethylene (LDPE) from last week's price of €1,120/tonne FD (free delivered) NWE (northwest Europe).

($1 = €0.81)

By: Cuckoo James
+44 (0) 208 652 3214

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