PE margins back to 2003 levels


The excellent ‘ICIS Weekly Margin Report – PE’ is starting to tell a very sad story about polymer margins. The chart (above) shows that the ethylene margin, in yellow, has been falling steadily since the start of the year. The same is true for the HDPE margin, in blue. And the Report notes that if market conditions don’t improve, then Q2 performance ‘will see the weakest quarterly result since 2003’

The Report focuses on European markets, but its conclusions apply to all major regions. It calculates the average Q2 margin for integrated HDPE producers is currently €312/tonne, and for standalone producers it is just €61/tonne. It also calculates that margins for the month of May are now as bad as they were at the trough last December. And with feedstocks costs still rising, producers and consumers clearly face a most difficult position next month.

Update, 27 May. The latest Report, just published, shows that the current margin for integrated HDPE producers is now just €118/t, as naphtha prices rose over 6% last week.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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