Dow Europe places order stop on fresh LDPE sales

11 July 2013 11:36  [Source: ICIS news]

LONDON (ICIS)--Dow Europe has place an order stop on all fresh low density polyethylene (LDPE) sales with immediate effect, a company source said on Thursday.

The stop was because of “an extremely strong order load and in anticipation of August increases,” said the source.

LDPE has been the tightest polyethylene (PE) grade for some time and prices have been under heavy upward pressure in recent weeks.

“LDPE volumes in July have been better than the whole of June so far,” said the source.

A couple of other suppliers also reported a stronger LDPE order intake.

One stressed the tight availability of LDPE and also C4 (butene added) linear low density polyethylene (LLDPE) in parts of Europe.

“On top of the fast order intake, we are facing ...continuous pressure from the upstream... we could quickly come to a closing of the order books if we go on with such a pace,” it said.

Buyers confirmed upward pressure, saying that one producer in particular was forcing through stronger increases than its competitors, an element that some sources thought could be leading to strong demand with competing sellers, as buyers shunned hikes that were generally considered higher than the market wherever possible.

“They are so out of step with the market,” said one buyer, “but I suspect they are under a management mandate.”

LDPE prices were still trading as high as €1,350/tonne ($1,731/tonne) FD (free delivered) NWE (northwest Europe) on a net basis, but traders were now offering also at €1,280/tonne FD NWE.

The high density polyethylene (HDPE) sector was not as strong as LDPE, and demand for blowmoulding and film grades was low. HDPE injection was firmer, as deliveries of Egyptian material were affected.

Production is still cut back and PE inventory levels with producers remain low.

Any upturn in the August ethylene contract would be based on cost, and many sources were not convinced that higher prices could be implemented next month in spite of the recent spike in naphtha prices, as fundamentals remain weak.

($1 = €0.78)

By: Linda Naylor
+44 20 8652 3214

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