Europe MLLDPE players wait for ethylene to settle

LONDON (ICIS)–Metallocene linear low density polyethylene (MLLDPE) players are waiting for the August ethylene contract to settle, along with sources in the wider polyethylene (PE) market, they said on Monday.

PE prices have been following movements in the upstream ethylene market fairly closely for some time now.

“A trend is developing where we [converters’ prices] are moving more in line with ethylene,” said one buyer.

MLLDPE demand in July was in line with much of the PE market, but competition between linear low density polyethylene (LLDPE) grades remained strong. In spite of this, sellers managed to bring prices up, largely in line with the €50/tonne increase in the July ethylene contract.

MLLDPE net prices are now trading around the €1,400/tonne FD (free delivered) NWE (northwest Europe) and above. Some prices remain below this level, but prices as low as €,1320-1,340/tonne have disappeared.

Tightness in the C4 (butene based) LLDPE market eased as the month progressed. It had been supported by a short low density polyethylene (LDPE) situation, following the delayed start-up of SABIC’s 400,000 tonne/year plant at Wilton in the UK. It is widely thought that this plant is now back on stream.

LLDPE C4 availability has also been affected by fewer imports, particularly since the increase in import duty on product from major importing regions in January. Prices have been slow to increase, however, and some sources put this down partially to increased amounts of imports of finished film.

Europe imports as much as 85-90% of its C4 LLDPE needs.

C6 (hexene based) LLDPE, meanwhile, is said to be widely offered, with no limitations on supply, according to buyers. Blending in the LLDPE sector means that converters can switch LLDPE grades, and this is often done on price, but also availability.

C8 (octene based) LLDPE has been facing competition with MLLDPE grades in Europe in recent months, and there was talk of spot offers at competitive prices in July.

Much of the PE market is now waiting for the August ethylene contract to settle.

“Nobody is under pressure,” said a seller. “ Everybody is waiting [for the August ethylene contract], then they will commit.”

A slight reduction in the August monomer contract was expected by PE players, and while buyers expected this to be transferred directly to their own markets, sellers hoped to be able to hang on to some of the wider ethylene/PE spread, and players in the MLLDPE market were no different.

August is expected to be a quiet month, and the expected relative stability in August pricing was leading many to begin thinking of post-holiday September.

MLLDPE is used in the manufacture of stretch film.