Ethylene pushes Europe PE prices up €50/tonne

14 September 2013 00:01  [Source: ICIS news]

LONDON (ICIS)--Freely negotiated monthly prices in the European polyethylene (PE) market have risen €50/tonne because of the increase in the September feedstock ethylene contract price.

It is not clear, however, whether producers will be able to achieve their initial September targets of increases above that of the monomer increase because of cautious buying sentiment.

Producers targeted increases of three digits last week, but following discussions with buyers this week, some suppliers have revised their ideas.

“€100/tonne is not realistic,” one producer said of September PE increases.

A second producer in the high density film and blow moulding market added: “For blow moulding and film, [the September increase is] exactly the monomer price, no more, no less”.

Uncertainty about the direction of crude and naphtha prices due to the political situation in Syria has caused many buyers to delay their September negotiations as long as possible, buying on a hand-to-mouth basis until a clearer picture of the situation in the region emerges.

Several producers noticed buyer hesitation, with one commenting that buyers are not taking a kilo more than they need until they feel more comfortable about the outcome of the geopolitical situation in Syria, and its effect on oil prices.

“We have seen an impact of people holding off because of Syria. Not overwhelmingly good. There is still uncertainty there, even though it’s [the threat of military action] dropping away with more political statements,” a producer said.

On the buy side, some sources said they have concluded one or two discussions with suppliers, but the majority reiterated that it was still too early in the month to discuss what the final September PE increase will be.

“I don't know anyone who is rushing to agree prices yet, myself and everyone else that I am talking to are waiting for a bit more visibility on Syria before we commit,” a buyer said, adding: “I don't expect anything to be agreed before next week.”

Several sources also talked of additional material coming into Europe from the Middle East, adding that any congestion in the region has all but disappeared. One producer said it expects to see some additional Middle Eastern material arrive in Europe in November.

Some market participants believe that PE prices are currently in a bubble which will eventually burst, and buyers do not want to purchase stock at increased rates this month and get caught out with higher-priced stock later in the year when prices fall.

“Price increases of €50/tonne are realistic, but decrease is possible for the last quarter. I think October is the month for decrease and change in the dynamics of the market,” a buyer said.

($1 = €0.75)


By: Matt Tudball
+44 208 652 3214



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