LONDON (ICIS)--Low density polyethylene (LDPE) stocks are at their lowest level this year, and linear low density polyethylene (LLDPE) stock levels are not far behind, polyethylene (PE) market sources said on Tuesday.
On Friday 13 December Dow Europe was closing its LLDPE order books for December, saying that LDPE books would be closing shortly afterwards.
LDPE spot prices have risen in December, from a low of €1,260/tonne ($1,726/tonne) FD (free delivered) NWE (northwest Europe) to a range of €1,320-1,350/tonne FD, but business is still not very brisk.
Some LDPE December prices have risen by more than the €30/tonne increase in the December ethylene contract price, because of the tightness in this particular sector.
“Last week we closed order books for LDPE and LLDPE and we will not accept any order to be closed at [only] plus €30/tonne, still targeting at least €50/tonne [up] on December” said another producer.
Buyers acknowledged that they were under pressure to pay higher prices in December.
“I don’t think I will be getting away with less than plus €50/tonne for C8 (octene based LLDPE) this month,” said a large buyer.
Dow Europe is the main supplier of C8 LLDPE in Europe and according to buyers the company has been offering a €50/tonne increase this month for all PE grades.
Some sellers are also eyeing increases for January.
“Cracker margins are at rock bottom,,” said another PE producer. “Olefins sellers will need to get increases in January.”
PE players would expect producers to target any increase in the new January ethylene contract to be passed on to PE players, and some have already said they would be targeting margin improvement.
Details can be expected once the December ethylene contract is settled.
($1 = €0.73)