LLDPE import dearth continues to affect pricing in Europe

Linda Naylor

25-Nov-2014

Focus article by Linda Naylor

LONDON (ICIS)–The reduction in imported linear low density polyethylene (LLDPE) volumes into Europe is still having an effect on pricing, sources said on Monday.

September import data has again shown a dramatic fall compared with 2013.

EU LLDPE import and export data by Eurostat (units: tonnes)

Imports

Exports

September 2013

81,022

10,341

September 2014

46,365

17,025

Change year on year

-42.77

64.63

Eurostat import/export data is subject to revision as more detailed information becomes available. EU figures comprise the aggregate of member states data published by Eurostat.

This should be seen in context, however, as imports in 2013 were high, given that new duties were to be imposed on product from GCC countries, among others, on 1 January 2014.

Butene-based (C4) LLDPE is imported mainly from GCC countries, around 90% of usage, according to sources, and the duty for imports from this region increased by 3% to 6.5% in January.

Initially there was little effect from this increase in duty as sellers had made provision for it and exported big volumes into Europe towards the end of 2013 to avoid the rise.

By the fourth quarter of 2014, however, there has been a noticeable lack of product and spot prices have remained solid in spite of the €90/tonne drop in the November ethylene contract price.

“C4 [LLDPE] is the only PE [polyethylene] I will make sure I have in stock,” said one large buyer, who was keen to avoid any stock build at the end of the year.

Exports and increasing tightness in other PE grades have also led to stronger demand than expected in Europe in recent weeks, as other grades have been substituted for C4 LLDPE and producers have kept a close eye on working capital as the end of the year approaches.

LLDPE spot C4 prices are still trading in the mid-€1,200s/tonne FD (free delivered) NWE (northwest Europe), although trades are very thin, given the lack of available spot product. The current ethylene contract stands at €1,060/tonne FD NWE.

Speculation in the market over January pricing is rife.

The lack of availability leads some players to suggest an increase might be feasible.

“I expect [PE] prices to go up in January,” said one trader.

Buyers, however, were not convinced.

“I see no reason for prices to go up in January,” said one, citing poor economic data for Europe in support of its argument.

The December ethylene contract is expected to slip again, following November’s relatively hefty fall, and some sources see the possibility for producers to regain more margin.

PE prices fell by an average of around €60-70/tonne in November, thereby aiding margins at the producer level, and some sources expect the current tightness to lead to a similar situation in December.

The added boost in demand for producers, as converters ensure they reach end-year volume rebates, could help producers maintain margin, while traders suffer from lack of product, as offers from abroad are not workable with Europe’s low net numbers.

LLDPE is used widely in packaging and in the agricultural sector.

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?