Price and market trends: Europe LLDPE imports down, availability tightening

30 August 2013 09:40  [Source: ICB]

Signs of recovery among European consumers is coupled with tighter supply, putting upwards pressure on prices

Linear low density polyethylene (LLDPE) import data continues to show a big drop in imported volumes, and the result is a tightness that is forcing buyers to pay more for their material, sources said on 19 August.

Data released from statistics agency Eurostat showed LLDPE imports into the EU to be down by close to 40% in June 2013 compared with the same month last year.

IMPACT ON PRICING
As Europe is a major net importer of LLDPE this is having a significant impact on availability and pricing.

"Things are tightening up really quickly," said one producer. "Customers have come back and all [PE] products have record or close-to-record low stock levels."

Demand since May has been solid in Europe, following several months of very weak volumes, and cracker and polymer output has been carefully controlled to be in line with demand as upstream costs are high.

Few players, buyers or sellers, can afford to keep high stocks, and inventories are carefully controlled along the chain.

"We've had four months of very good sales now," said the producer, "demand is up a bit...but the big change is imports."

Sources questioned the reason for such a reduction in LLDPE imports. The recent religious holidays in the Middle East meant that truck deliveries were affected by shorter working hours and there have been reports of port congestion in Saudi Arabia that have affected exports. Some sources thought imports had been reduced in line with lower demand in Europe but this could not be confirmed.

European LLDPE sellers have focused their attention on speciality grades in the face of a huge increase in LLDPE capacity from low-cost producers, mainly in the Middle East.

Consolidation in Europe is continuing in the LLDPE and high density polyethylene (HDPE) sectors in particular. Several PE closures are taking place in Europe in 2013-2014.

LOW INVENTORIES
As inventories are low in Europe, following a less gloomy economic picture, fewer imports and production cutbacks, producers are confident of more price increases in September, after hikes of €40-60/tonne in August.

LLDPE C4 spot prices were trading on 19 August at around €1,320-1,330/tonne FD (free delivered) NWE (northwest Europe), from a low of €1,260/tonne FD NWE in mid-July, on a net basis.


By: Linda Naylor
+44 20 8652 3214



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