FocusLower Europe LLDPE imports support Europe pricing picture

18 June 2014 14:33  [Source: ICIS news]

Focus article by Linda Naylor

LLDPE film is commonly used in the film and packaging in the agricultural and food sectors, while LDPE lamination is used in coatings such as on flexible packaging and paper lamination.LONDON (ICIS)--Lower imports of linear low density polyethylene (LLDPE) into the EU, as demonstrated by figures released by statistics agency Eurostat on Wednesday, are supporting the European market, some sellers said on Wednesday.

Imports of LLDPE from the rest of the world slumped by 64.40% year on year in April, according to the data, while exports from the EU rose by 22.44% over the same period.

As Europe imports an estimated 85% of its C4 (butene based) LLDPE, this has led to tighter supply in this sector.

Some buyers said they are able to cover their needs with alternative materials, however, if indeed they noticed shortages at all. C6 (hexene based) LLDPE was sometimes offered at levels barely higher than commodity C4 grades, they said.

The added complication of metallocene LLDPE (MLLDPE) offered throughout Europe on a fairly widespread basis, often competing with C8 (octene based) LLDPE, meant that buyers, while acknowledging that LLDPE availability was not long, said they were not facing any shortages.

Spot prices of LLDPE C4 have increased to the high-€1,200s/tonne FD (free delivered) NWE (northwest Europe) but the move has been slow.

One major producer said its LLDPE prices were up by €30-40/tonne in June, on reduced availability.

“We have closed our order books for LDPE [low density polyethylene], LLDPE and HDPE [high density polyethylene],” said the source. “With fewer imports and good demand we are expecting a strong July.”

“Our LLDPE books are almost closed,” said another producer.

The retroactive nature of much LLDPE and LDPE business meant that end-month prices are not settled in many cases, but with crude rising on Iraq tensions and the possibility of an increase in the July ethylene contract, according to some PE producers, pressure could be stronger than some buyers had expected.

The drop in imported volumes in April follows a drop of 5.2% in January, one of 15.3% in February, but a rise of 2.9% in imports in March.

Imports into Europe in 2013 as a whole rose by 16%, according to Eurostat data, but December year-on-year LLDPE imports showed a massive rise of 175% as importers rushed to bring material into Europe before the rise of import duty from GCC countries, among others, from 3% to 6.5% on 1 January 2014.

Some sources said the reason LLDPE spot prices had risen so slowly so far in 2014, was down to so much December volume taking time to be absorbed into the market.

LLDPE is used widely in the packaging and film sectors.

By: Linda Naylor
+44 20 8652 3214

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