Europe March PE prices exceed monomer hike on demand, tight supply

LONDON (ICIS)–March polyethylene (PE) prices are climbing higher than the €100/tonne increase of the contract price for feedstock ethylene, market participants said on Friday.

Sellers speak of increases of €130-150/tonne above February levels, with some thought to be seeking even greater hikes for certain grades of PE.

Justifying these significant increases, they cite better-than-expected demand, comprising both a seasonal upturn and the need for customers to purchase following weeks of hand-to-mouth buying.

“We’ve already shut our order books for LL, HD, LD and metallocene,” one producer said, referring to the grades linear low density PE (LLDPE), high density PE (HDPE) and low-density PE (LDPE).

”We’ve increased prices by €140/tonne across the board. We have limited volumes to sell, and customers are accepting the increase. There’s seasonal demand and low stocks,” the producer said.

A lack of supply is another key factor, stemming from both production issues and a paucity of imports having entered Europe lately.

The weak euro has made the market an unattractive selling destination for importers, while encouraging exports from Europe.

Meanwhile, buyers do not believe demand is particularly robust.

On average, buyers speak of March hikes of around €120/tonne above February levels.

“Producers are talking about €150/tonne increase or higher,” a buyer said. “We expect maybe €120-130/tonne. We think they [producers] did well the last two months to increase margins. They’re talking about really good demand in the market. Demand is OK, but it’s not fantastic. Look into the industrial section. It’s not as sufficient as we expect it to be.”

Domestic prices for LDPE were assessed by ICIS at €1,280-1,305/tonne FD (free delivered), up €120/tonne from last week.