04 July 2013 16:47 [Source: ICIS news]
LONDON (ICIS)--Producers in the European high density polyethylene (PE) pipe market want to raise prices by up to €30-40/tonne ($39-52/tonne) for July in order to strengthen margins, but some buyers are not willing to accept any increase, market participants said on Thursday.
Last week a producer said it was looking to increase prices by up to €60/tonne, but this week it has lowered targets to €30/tonne.
A second producer is targeting increases of €40/tonne on June prices in order to improve margins.
“We believe the market can accept some increase … [We] have no intention to accept a rollover,” the producer said.
However, buyers do not want to accept such large increases, with some stating they will not accept anything other than a rollover in July.
“We all know it's a difficult environment for the producers, but where we stand in the market today, [a €40/tonne] increase isn't realistic,” one buyer said, adding that producers should be targeting modest price rises, if any, following the feedstock ethylene July contract price rolling over.
Buyers understand the current market has been tough on producer margins, but demand levels are not expected to rise during July because of the upcoming summer holiday period, therefore producers should keep targets low.
Buyers and sellers agreed year-on-year demand has dropped compared with 2012 because of economic uncertainty in the market and a reduction in end-use consumer confidence.
“Demand is certainly down year on year. You just need to open newspaper to see economic situation is not prosperous and booming [as 2012],” a producer said.
One buyer suggested the drop was as big as 20%, but other market participants did not agree with such dramatic levels.
There was talk some buyers had already accepted increases for July, but this could not be confirmed at the time of writing.
Discussions are on-going, with a better idea of July prices expected to emerge next week.
($1 = €0.77)
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