Europe HDPE pipe producers likely to target June price hikes

23 May 2013 16:00  [Source: ICIS news]

LONDON (ICIS)-- High density polyethylene (HDPE) pipe resin producers are likely to seek price rises in June as a result of a slight seasonal improvement in demand and expectations of the June ethylene contract price settling at a rollover or small increase, sources said on Thursday.

A producer said: “Demand is well, the market is starting after the too long winter period. Prices are stable, but increasing towards the end of the month.”

May HDPE pipe prices fell by an average of €90/tonne ($115/tonne) from April, following the settlement of the upstream May ethylene contract price at a decrease of €100/tonne from the previous month.

As a result, HDPE pipe producers are keen to recoup some of their losses.

“Yes, there’s some improvement in demand, but it could be because people expect an [price] increase,” a second producer said. “It’s difficult to say what we'll target, we’ll go for a higher increase than [the forthcoming June ethylene contract price settlement], seeing the significant erosion [of margins] last month.

“We gave the full monomer decrease [and dropped HDPE pipe resin prices by €100/tonne in May], but levels are too low to be sustainable, margins are squeezed.”

One buyer does not fear any significant increase in the June price of HDPE pipe resin, however.

“The market has picked up, but not dramatically,” the buyer said. “Pre-buying makes no sense in my opinion. Maybe we’ll see a small monomer [increase matching that of ethylene] or a rollover, and on top a little margin improvement for [HDPE pipe resin] suppliers. All in all there’s no argument for pre-buying.”

Participants agree that any HDPE pipe resin price hikes for June will depend greatly on crude oil and naphtha values at the time of the June ethylene contract settlement.

($1 = €0.78)

By: Jo Pitches
+44 208 652 3214

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