Europe PE margins fall on higher feedstock costs

LONDON (ICIS)–Polyethylene (PE) plants in Europe posted a drop in contract and spot margins last week following an uplift in the previous week, ICIS margin analysis showed.

Liquefied petroleum gas (LPG), in particular, saw a spike in pricing. In addition, for high density polyethylene (HDPE) and linear low density polyethylene (LLDPE) grades, falls in pricing also weighed on spot margins.

In the week to 29 November:

– Naphtha price rose by nearly 4%

– LPG values went up by more than 6%

HDPE contract margins based on naphtha fell 11%; co-products credits were flat:

LPG-based HDPE contract margins were down by nearly 10% week on week; co-product credits slightly fell.

LDPE contract margins based on naphtha decreased by nearly 10%, while co-product credits were flat:

LPG-based LDPE contract margins fell by 9% week on week.

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

In the week to 29 November, the amount of PE on offer was unclear, but what was available was reported to be offered to so many buyers that sentiment was strongly affected.

US imports continue to have a dominant position in Europe, exerting downward pressure on spot pricing, particularly for HDPE and LLDPE.

End of year rebates are supporting contract demand, and supply remains ample.

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