07 November 2013 23:59 [Source: ICIS news]
Some buyers are pushing for a bigger decrease, and some sellers are attempting to retain some of the €30/tonne drop in the November ethylene contract price.
Demand is fundamentally slow, because of general economic factors affecting construction, and also because of seasonal factors, as winter weather affects the construction industry.
One producer noticed unusually high demand for PE 100 pipe orange pipe grade, however, and suspected production issues in Europe or the Middle East, but no issues could be confirmed.
Basell Orlen’s force majeure on HDPE was restricted to a couple of HDPE film grades from Plock in Poland. HDPE production is expected to be down for at least 25 days in total, having been brought to a halt on 24 October.
The increase in import duty from the GCC (Gulf Cooperation Council) countries in January is beginning to cause more discussion in the HDPE sector in Europe and some importers are concerned about the possibility of having to take a 3.5 percentage point decrease in margins. It is not at all clear how some major importers will approach the change.
“I am not prepared to take that hit,” said one importer, but much will depend on how the major sellers behave at the beginning of 2014.
“Ultimately it will be down to supply and demand,” said a large buyer.
Duty will be raised from 3% to 6.5% from 1 January 2014.
Linear low density polyethylene (LLDPE) buyers have been showing more concern than HDPE buyers as Europe is a very large net importer of LLDPE from the Middle East, but HDPE sellers are now also expressing concern over the potential loss of margin.
Some HDPE buyers argued that low-cost ethane-based suppliers could afford to take the hit.
“We are still looking at what we will do,” said another importer.
($1 = €0.74)
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