Price and market trends: Europe HDPE demand strong while supply tightens

13 June 2014 10:43 Source:ICIS Chemical Business

Industry figures are said to show growth of over 6% year-to-date compared with 2013

High density polyethylene (HDPE) supply has tightened in Europe, on strong demand and supply issues at some producers, sources said on 6 June.

“May was our highest production month ever, and also our highest sales month ever,” said one producer.

“Demand is strong,” said another producer. “We are not sold out but we are refusing offers from non-regular customers at present.”

Industry figures are said to show growth of over 6% year-to-date compared with 2013. Strength in the HDPE sector comes after several years of poor performance when growth was negative for months on end, according to sources.

HDPE injection supply was said to be affected by the shutdown of Egypt’s SIDPEC’s 225,000 tonne/year plant in Alexandria. The unit was initially said to be due down for a week, in line with a shutdown at its feedstock supplier’s plant, from 1 June, but several sources expected it to be down for longer than this. HDPE injection net prices were trading in the mid-€1,200s/tonne FD (free delivered) NWE (northwest Europe) at the end of May.

HDPE blowmoulding availability is also tightening. A major Middle Eastern importer is said to have had a shutdown in recent weeks that has curtailed supply, and sources in Europe are concerned that the Muslim fasting month of Ramadan will affect imports of HDPE into Europe during July. Continued problems in the US blowmoulding sector also affected some buyers in Europe.

HDPE blowmoulding net prices were still trading in the low-to-mid €1,200s/tonne in May, however, but levels below €1,200/tonne had largely disappeared.

HDPE film supply was said to be reduced largely because of fewer imports following the increase in duty from GCC countries on 1 January 2014. HDPE pipe was also stronger and spot prices have risen to the mid-to-high €1,200s/tonne FD NWE at some accounts. A planned shutdown at Total Petrochemicals’ Feluy site in Belgium is also having an impact on supply, according to sources. There was no confirmation from Total.

In spite of the strength of the HDPE sector as described by producers, buyers were less sure they would be paying the proposed increases of up to €50/tonne in June.

“We don’t believe the fundamentals are there to justify an increase,” said one large buyer.

“I’m expecting between rollover and plus €10/tonne,” said another June buyer, that also went on to say lower naphtha prices should lead to some upstream easing in the coming months. A €10/tonne increase would cover the increase in the June ethylene contract.

Much discussion in the HDPE sector in Europe is down to positioning so far in June, and final prices will not be known at some large accounts until well into the month.

By Linda Naylor