Europe PE sellers aim for more margin improvement in December

Focus article by Linda Naylor

LONDON (ICIS)–Polyethylene (PE) producers are targeting more margin improvement for December, buyers said on Tuesday.

Many numbers were mentioned and some sellers seemed to be differentiating between grades.

One producer was looking for plus €50/tonne for high density polyethylene (HDPE), while linear low density polyethylene (LLDPE) and low density polyethylene (LDPE) sellers were looking for more, with numbers up to plus €100/tonne talked but not confirmed.

“They [producers] are talking plus €60-80 [/tonne] for December,” said one LLDPE buyer.

Other buyers said they had not yet been approached with ideas for December, but most expected to be faced with increases.

“They could get plus 30-50 [€/tonne] in December,” said another buyer. “Things are no different this month despite their margins being very, very good. The wind is with them and they will have that in December. Things are still pretty tight.”

Another producer was said to be looking for €50/tonne on top of the €22.50/tonne increase in the December ethylene contract settlement.

The December ethylene contract has been fully settled at €927.50/tonne FD (free delivered) NWE (northwest Europe).

PE supply was very tight in November and some buyers said sellers were preparing them for early closures of order books in December as stocks were still low.

Margins in 2015 have been very strong for producers, and if December prices move up in line with current ideas they will be the best so far this year.

PE is used in packaging, the manufacture of household goods and in the agricultural industry.