FocusEurope PE, PP producers target March hikes in weak market

01 March 2013 12:07  [Source: ICIS news]

By Linda Naylor

PolypropyleneLONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) buyers in Europe are facing increases in March following €50-55/tonne ($65-71/tonne) hikes in upstream monomer contracts this week, sources said on Friday.

European demand is weak and most sources do not expect much of an upturn in the short term, however.

No official announcements have been made for March PE and PP pricing, but buyers say they have been approached with new proposals that are €50-100/tonne higher than in February. Many are sceptical that such increases can be foisted onto such a flat market.

“It’s too early to say what will happen for March yet,” said one PP buyer. “I had a few calls yesterday telling me my price would be higher than in February, but I also got the impression that they don’t want to lose volume.”

Most sellers acknowledge that demand has been below expectations for some months and this has continued into 2013.

There has been an increase in PE requests from some spot buyers following the settlement of the monomer contract, according to some traders, but at levels below the new ethylene contract price in many cases.

Spot low density polyethylene (LDPE) prices are no longer trading below €1,300/tonne FD (free delivered) NWE (northwest Europe), and homopolymer PP  injection spot prices have been lifted above €1,200/tonne FD NWE.

On Wednesday this week the new March ethylene contract settled up by €50/tonne, to €1,325/tonne FD NWE, while propylene settled up by €55/tonne, at €1,155/tonne FD NWE. These prices are subject to undisclosed discounts.

“We have had new interest this week,” said one PE trader, “but it still has to be translated into hard business. Bids are higher than before.”

C4 linear low density polyethylene (LLDPE) remains the most sought-after PE grade in the spot market, but even here sources are complaining about competition from finished film from the Middle East that was offered at price levels barely above the granule price in Europe.

On the whole, there is an expectation of some sort of a price increase in Europe, but many buyers think they will be able to secure product at less than the monomer increases, given the lacklustre nature of the markets.

Production is reduced in Europe and looks likely to remain so for the foreseeable future. One major producer said it was not worth buying extra quantities of monomer to producer polymer at a loss.

PE and PP are used extensively in packaging and household goods sectors. PP is also used in the automotive industry and PE is also used in agriculture.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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