Europe naphtha-based PE margins rise on cheaper feedstock

LONDON (ICIS)–Naphtha-based polyethylene (PE) plants in Europe posted an uplift in their contract and spot margins last week following a month of declines, ICIS margin analysis showed.

Those plants where production is based on liquefied petroleum gas (LPG) posted falling spot margins, while contract margins slightly rose week on week.

In the week to 22 November:

– Naphtha values fell by more than 2%

– LPG values fell by nearly 1%

High density polyethylene (HDPE) contract margins based on naphtha went down by 7%; co-products credits were flat:

LPG-based HDPE contract margins went up by nearly 1% week on week; co-product credits slightly rose.

Low density polyethylene (LDPE) contract margins based on naphtha went up by more than 5%, while co-product credits were flat:

LPG-based LDPE contract margins rose by 0.5% week on week.

HDPE spot margins by feedstock:
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LDPE spot margins by feedstock:

In the week to 22 November, some PE grades have been severely affected by a wave of new capacity coming online in the US, supplying cheap PE to the European market.

Spot prices for HDPE and, to a lesser extent, linear low desnity polyethylene (LLDPE) have fallen.

Contract negotiations are expected to begin this week. Demand is being supported by end-of-year rebates, with consumers buying contract volumes to trigger their rebate.

Supply remains lengthy.

Click here to visit the ICIS margins analytics website.

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