16 May 2013 13:24 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS)--Turkish polyethylene (PE) and polypropylene (PP) business is being done at higher levels this week as European offers dwindle and Middle Eastern suppliers wait before giving new prices for June, sources said on Thursday.
Low density polyethylene (LDPE) offers from Europe jumped in price to €1,220/tonne ($1,564/tonne) CFR (cost and freight) by Thursday, from well below €1,200/tonne in recent weeks.
Even at this higher level, sources were not sure how much material was behind the offer and whether it would be available for long as European availabliity also tightened.
European product has the advantage of being duty free so offers from sources with a 6.5% duty to be applied have been frustrated by these offers.
Some Middle Eastern offers, subject to a 6.5% import duty, had traded below $1,400/tonne CFR in early May, but the few offers that are now available for new business are higher, at a minimum of $1,470/tonne. Even higher levels are expected when major Saudi Arabian producers reveal new offers for June.
Trades at $1,450/tonne CFR are said to be possible for LDPE.
High density polyethylene (HDPE) prices are also higher but the price move is slower to take hold than in the LDPE sector. Price ideas are around $1,450/tonne CFR from a low of $1,380/tonne in early May.
PP is widely considered to be fundamentally stronger than PE as there is a lack of ready cargo, and in this sector the mood is more optmistic.
There have been no formal offers from major Saudi suppliers for June yet, but offers for late-June delivery from other sources are said to be as high as $1,480/tonne CFR. There was talk of offers above $1,500/tonnne CFR for fibre grades from a low of around $1,400/tonne CFR at the end of April.
Local producer Petkim also announced $20-25/tonne increases for PE and PP earlier this week.
PE players in particular add a note of caution, saying the current upward trend is based simply on upstream increases and production cutbacks rather than any change in the fundamentally weak market.
($1 = €0.78)
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