09 November 2012 11:34 [Source: ICB]
Slowing demand and falling prices in Europe, plus a long lead time for delivery, are expected to curb high density polyethylene (HDPE) pipe resin import deals for the rest of 2012, with a pick up for spring next year, industry sources say.
HDPE pipe resin prices fell by €30/tonne ($39/tonne) to €1,550-1,590/tonne in October, following a reduction of €10/tonne in ethylene, and a supply overhang. Market sentiment remains bearish, which is expected to continue as construction slows in winter.
Imports of HDPE 100 and HDPE 80 have already been low in 2012 compared to commodity grades of HDPE, but many importing distributors have now stopped doing deals altogether.
Industrial requirements are stringent for the HDPE pipe grade, which is a specialty grade mainly used in water, sanitation and natural gas piping applications. Obtaining certification is a time-consuming procedure which has deterred most Middle East and Asian exporter.
The PE 100+ Association, a major industry body, has only a handful of members in Europe, as well as Thailand's SCG Chemicals, Japan's Prime Polymer and the United Arab Emirates' Borouge, to have obtained certification.
"With this documentation they have succeeded to isolate the market," said an importing distributor. "We are not active anymore. Nothing in the pipeline, two years we've been doing it. Each year we tried a new supplier: Thai, then Koreans. We will try to buy from another source next year. It makes no sense to import, too long a transit time, and certification issues."
A major HDPE pipe producer in Europe said: "In the pipe business, you cannot do business that quickly because you need approval from the institutes concerned."
The strict certification requirements and the resultant low HDPE imports are in stark contrast to commodity grades of polyethylene (PE) which are being hemmed in by growing Middle East production capacities.
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