Europe December PE business gets under way, imports still a hot topic

LONDON (ICIS)–Polyethylene (PE) discussions have begun in Europe for December business. Some early settlements have been made amid a wide range of reported imported prices.

A clear demarcation between spot and contracted volumes has developed. Buyers continue to purchase from suppliers to trigger year-end volume rebates – often shunning low spot prices in the quest for the rebate, which is often applicable to the total volume bought annually.

A two-tier situation can even be seen in the spot market. New traders are offering material from producers – with new capacity in the USA and no assets in Europe – with these tending to be at the low end. In contrast, local European and US sellers with assets in Europe, tend to be making offers at the high end. The difference between the two can be almost as much as €100/tonne.

Not all buyers can take the low-end spot offers. Most need strict approvals for the material to work in some downstream applications, and brand owners are usually very specific about what they can use.

One trader pointed out, however, that it takes around six months to get an approval, so the situation could change in the medium term as PE from new plants is not expected to go away anytime soon.

Outlets for PE to China are very restricted because of the prohibitive 25% duty added to US PE.

In the contracted market, an increase of €10/tonne in the new ethylene contract has been largely ignored by the freely negotiated market, and some limited price reductions have been heard for some grades this month.

Most of the business is done at the end of the month, so a final outcome for December PE pricing is not expected for a few weeks.

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