Europe PE prices in the doldrums despite Asian increases, Brent close to $70/bbl

15 January 2018 12:30 Source:ICIS News

LONDON (ICIS)--Polyethylene (PE) prices in Europe are firmly in the doldrums, even as Asian prices continue to rise and Brent crude oil flirts with $70/bbl, ICIS data showed on Monday.

Asian prices continued to firm on Monday, after a lift during the week ending the 12 January, with levels of linear low density polyethylene (LLDPE) C4 (butene based) pricing up to $1,170-1,210/tonne CFR (cost and freight).

European C4 LLDPE prices are stagnating in the €1,100-1,150/tonne DDP (delivered duty paid) range.

The greater part of the C4 LLDPE used in Europe is imported, and most imports are subject to a 6.5% duty – with South Korea as the notable exception at zero duty.

Most importers – and for C4 LLDPE this is Middle Eastern sellers – prefer to sell to Asia than Europe, but material still enters Europe via the normal channels – mainly producers that have facilities in both Europe and the Middle East.

The sector where the price differential is most pronounced is in high density polyethylene (HDPE) markets.

Spot HDPE prices have been consistently low in Europe, and in January monthly pricing has so far remained stable, with sellers unable to lift levels, in spite of the low net prices.

Import offers have been too high for traders to work with, yet HDPE is a product that depends on imports in Europe, after several plants closed permanently in Europe.

New product from North America was meant to bridge the gap, but so far none is available, and FOB (free on board) levels ex the US still do not work with European prices.

“We’re not getting anything from the US,” said a trader. “We would need to sell at €1,350-1,400 [tonne DDP].”

Under these circumstances, several players – both buyers and sellers – are expecting levels in Europe to rise.

One producer said it had already managed to lift some net spot prices, and quote levels widely well above €1,100/tonne, but low-end prices below this threshold still existed in January, said players.

“We are struggling to raise prices,” admitted another producer, “but there will be an upward price push in quarter one.”

An upward price move did seem inevitable to many players, as the gap between regions rose, and imports were increasingly unworkable.

“We are not as pressured to reduce the price anymore,” said another trader. “I believe the current price is the bottom and there is only improvement in the first half of 2018.”

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


Picture source: PhotoAlto/REX/Shutterstock

By Linda Naylor