Europe monthly PE rises in line with ethylene

Matt Tudball

06-May-2016

LONDON (ICIS)–European polyethylene (PE) monthly prices have risen by €40/tonne, in line with the May feedstock ethylene contract price, buyers and sellers said on Friday.

Producers want to pass on more than the ethylene increase in May, but buyers are resisting so far because they feel the ethylene/PE spread is already too large and do not want to help producers strengthen margins further.

“For May, they [producers] say plus €60/tonne but now it’s dropping, now at only plus €40/tonne, I think they may not even get plus 40,” a buyer said.

“I think realistically to come out [of discussions] at plus €40/tonne for low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) C4,” a second buyer said, adding: “we already [settled at plus €40/tonne] with one supplier for May. Nevertheless, the talking on the producer side is still €50-60/tonne over April.”

Public holidays across Europe delayed some price discussions in what should have been a busy first week of the month. Sources said it will be clearer next week if the market accepts anything more than the €40/tonne increase seen so far.

Some producers are targeting increases of up to €60/tonne over April levels, mainly down to reduced availability in the market, though most described the market as balanced as opposed to tight.

However, with current and upcoming turnarounds, as well as some production issues, buyers may struggle to find some grades later in the month, sources said.

“Our target is to increase the margin over monomer, €20/tonne maybe over the monomer increase. It seems more difficult than in previous months, but [we see a] minimum increase of €40/tonne for sure, and have done some deals as well slightly above that,” a producer said.

Only one source, a producer, talked of monthly prices below €40/tonne, saying it had settled some business at €20-30/tonne over April, but said this did not apply to all producers, which it said were looking for at least the monomer pass through.

All participants agreed that a better idea of how much, if any, increase over that of the rise in the ethylene contract producers will be able to pass on to buyers will be known next week when all players have returned to the market.

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?