02 September 2013 11:15 [Source: ICIS news]
LONDON (ICIS)--Dow Europe is targeting increases of €150/tonne ($197/tonne) for its September polyethylene (PE) sales, a company source said on Monday.
The August contract stood at €1,210/tonne FD (free delivered) NWE (north west Europe), up by €40/tonne from July. August PE prices rose by €40-50/tonne following its settlement.
Expectations of an increase in the September ethylene contract were widespread but movements in the upstream naphtha market were volatile, and by Monday prices were decreasing from highs of last week, brought about by tensions in the Middle East.
Crude futures prices softened as expectations of a US military strike against Syria eased after US President Barack Obama said he would seek congressional approval for military action.
On Monday morning, naphtha was assessed at $939-943/tonne CIF (cost insurance freight) NWE (northwest Europe) - down from its Friday close of $950-954/tonne CIF NWE. It was as high as $964/tonne CIF NWE earlier in the week.
Several PE sellers in Europe said they would wait for the ethylene contract settlement before making September pricing plans clear. A couple said they would probably be looking for some modest margin improvements of €20-30/tonne on top of any ethylene increase.
Many buyers acknowledged they would have to pay more as feedstocks rose, but they were prepared to resist paying more than any ethylene hike, and would keep a close eye on naphtha pricing movements as the month went by.
They argued that any reduction in naphtha prices would impact producers’ costs.
Inventories along the chain are low and both buyers and sellers maintain careful control on their warehouses as they do not want to hold high-priced stock in a potentially falling market.
Low density polyethylene (LDPE) spot prices are trading at €1,350-1,370/tonne FD NWE in early September.
($1 = €0.76)
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