FocusEurope MLLDPE sellers finding it difficult to raise prices

25 March 2013 12:44  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS)--Sellers of C6 (hexene-based) metallocene linear low density polyethylene (MLLDPE) are finding it difficult to raise prices in March as competing linear low density polyethylene (LLDPE) sellers look for volume, new product becomes available to the market and import offers remain competitive, sources said on Monday.

Poor demand for polyethylene (PE) in general, coupled with expectations of a substantial drop in the new April ethylene contract price, adds to sellers’ woes, sources said.

“Our main supplier is still targeting a €20/tonne ($26/tonne) increase,” said one MLLDPE buyer, “but we have managed to buy imported product at what I think is a good price.”

South Korean imports are offered directly to buyers at levels barely above €1,300/tonne FD (free delivered) NWE (northwest Europe) for end May, early June arrival, according to some buyers, but these prices are offered on a strategic basis and not available on a widespread basis.

A wide range of MLLDPE prices is heard in Europe. Some buyers say they can get hold of volumes below €1,400/tonne FD NWE, on a net basis, while others still say they are forced to pay €1,450-1,460/tonne FD NWE if they want to get the material they need from a supplier of choice. Levels at the low end of the range mentioned have not been confirmed by any European supplier.

Some buyers see poor demand and ample availability of non-metallocene C6 linear low density polyethylene (LLDPE) as a support to their efforts to maintain stability in monthly price discussions for MLLDPE business, rather than the increases that some sellers are still targeting for March.

“C6 [LLDPE] sellers do not want to lose market share at present,” said another buyer.

In the wider PE market, production is heavily cut back as buyers wait for lower prices in April, in spite of producers not being able to recover the full €50/tonne of the March ethylene contract. PE prices settled mostly between a rollover and a €20/tonne increase.

Some PE sellers said they need to maintain stability, or even increase PE prices into April, even if the April monomer contract falls, as margins remain thin.

MLLDPE growth is assured in the long term as it allows less material to be used for thinner films that have superior strength, and sources estimate that around 2% of PE demand a year could be put down to the process of downgauging. For the moment, however, converters are keeping a keen eye of the LLDPE market to see where money can be saved by using alternative blends.

INEOS converted its C4 LLDPE in Cologne, Germany, to MLLDPE at the end of 2012, and sources expect ExxonMobil’s new 650,000 tonne/year C4 LLDPE plant in Singapore to have an impact on markets worldwide once production gets fully under way.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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