UK PE, PP buyers under pressure to pay more on weaker pound

02 August 2013 11:15  [Source: ICIS news]

LONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) buyers in the UK are under pressure to pay higher prices than their European counterparts as the pound sterling continues to weaken against the euro, sources said on Friday.

“If the pound stays at this sort of level they [producers] will be aggressive,” said one buyer.

According to online foreign exchange service provide, on 1 July the pound was worth €1.167, while on the morning of Friday 2 August it was worth €1.147.

Many low density (LDPE) and linear low density polyethylene (LLDPE) buyers negotiate their UK prices on a monthly basis separately from their euro business, leading to anomalies that can last several weeks, depending on the state of the market.

PP and high density polyethylene (HDPE) buyers often buy product in euro terms, using either an exchange rate set on a pre-arranged date and time, or a monthly average.

“Everything we buy is completely euro-based with one exception where we use a monthly average,” said one large buyer.

“All our suppliers are on a monthly average,” said another.

Buyers expected the exchange rate to be a particularly thorny point in monthly discussions as its fall since early July had been particularly sharp and many sources expected it to remain at or around its current level.

PE and PP buyers throughout Europe are facing higher prices in August following the €40-50/tonne ($53-66/tone) increases in the August ethylene and propylene contracts.

($1 = €0.76)

By: Linda Naylor
+44 20 8652 3214

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