Europe PE, PP higher price targets fall short on slow demand
ICIS News : 8-Mar-13 10:58
LONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) price hikes are falling short of targets in Europe as stronger demand fails to materialise for March, sources said on Friday.
Producers had initially sought increases in line with the hikes in the March monomer contracts but it has become clear that these targets are not being reached.
The March ethylene contract rose by 50/tonne (66/tonne), to 1,325/tonne FD (free delivered) NWE (northwest Europe), and the propylene contract increased by 55/tonne, to 1,155/tonne FD NWE.
Polyolefin prices in March are not yet settled but it is clear that most producers have lowered their sights for March business.
We had been aiming for a rollover of margin for PP, but its clear that we wont get a 55/tonne increase now, said one producer.
Another said: Our policy was to get a 55/tonne increase but we wont get that.
March demand has turned out to be weak and producers are reducing output in line with slow demand.
"Its essential that production rates are kept low, said one of the producers.
PP buyers are expecting to pay an increase in March, if not the full 55/tonne hike of the propylene monomer contract.
I expect to be paying a 20-30/tonne increase in March, said one large buyer and several others agreed.
PP availability is not long, but supply outstrips demand.
PE buyers are more confident of achieving a rollover than their PP counterparts but most business is still under discussion.
Demand is weak, admitted a producer. Its a combination of tactics by buyers, a weak European economic situation and the concern of not holding too much stock along the chain.
Spot PE and PP prices have increased this week, however, and the very low levels that were offered at the end of February are no longer in the market.
Low density polyethylene (LDPE) prices have risen from below 1,300/tonne FD NWE and are now trading at around 1,320/tonne, while PP homopolymer injection prices are in the mid-1,200s/tonne FD NWE, compared to levels that had sunk below 1,200/tonne in some cases in February.
March price discussions are expected to continue over the coming days and weeks.
($1 = 0.76)
By Linda Naylor
+44 20 8652 3214