Price and market trends: Europe PE sellers target May hikes

08 May 2014 17:28 Source:ICIS Chemical Business

Some producers are targeting increases of €30-50/tonne on LDPE, LLDPE and MLLDPE, but targets for HDPE are lower

Several polyethylene (PE) sellers in Europe are targeting higher prices in May following a €5/tonne drop in the upstream ethylene contract, but buyers are not convinced, sources said on 1 May.

Some PE producers have set out their stalls for May and have said they are targeting increases of €30-50/tonne on low density polyethylene (LDPE), linear low density PE (LLDPE) and metallocene LLDPE (MLLDPE), but targets for high density PE (HDPE) are lower, at plus €15-30/tonne.

Ethylene settled for May at €1,160/tonne FD (free delivered) NWE (northwest Europe).

Naphtha-based PE producers in Europe complain of poor margins, saying that current PE price levels are not sustainable.

“The average naphtha price has been going up this year versus PE prices that have been decreasing. We all see the same costs,” said one producer.

European ethylene cracker margins based on naphtha feedstock have fallen, while margins based on LPG (liquefied 
petroleum gas) have risen, according to ICIS margin analysis on 28 April.

There is no evidence of any significant prebuying at present and no real concern from buyers.

“It’s a very calm time,” said one large buyer. “I think we’ll see more or less what we saw in April.”

April PE prices rolled over in many cases, particularly LDPE and LLDPE, while HDPE prices slipped. The April ethylene contract fell by €15/tonne, so rollover PE pricing meant margin improvement for PE producers.

One buyer said it had been informed of only a €10/tonne increase for May PE by its principal supplier. Another said it had already been offered a rollover from one its suppliers for May.

“Nobody is going to get an increase out of me with a €5/tonne reduction in ethylene,” it said.

“The only area where we have faced any shortage at all is EVA [ethylene vinyl acetate],” said another buyer. EVA is a thermoplastic whose properties approach those of elastomers.

End of April LDPE net prices are languishing around €1,270-1,280/tonne FD (free delivered) NWE; LLDPE C4 (butene based) remains at €1,250-1,260/tonne, while HDPE prices are still talked around €1,210-1,240/tonne but this remained unconfirmed.

By Linda Naylor