LONDON (ICIS)--Polyethylene (PE) buyers in Europe are beginning to get new offers for June pricing, and several were stunned at the strength of increases sought by suppliers.
“I am really surprised,” said one buyer on hearing that two of its suppliers were talking about €100/tonne increases.
“This is a big problem,” said another. “I hope we can find a solution.”
The gap between monomer and polymer has been slipping consistently, while cracker margins have remained strong, affected only recently by higher upstream feedstock costs.
“I was shocked with the kind of increase they are asking me for,” said another buyer.
“I’d rather wait and see... I won’t close prices soon. I would rather wait to see how the market evolves.”
One reason that many PE buyers were so surprised by the new offers in the market was that most did not perceive the market as tight, not even balanced.
Most buyers perceived several PE grades to be long.
This view was borne out by the lack of pre-buying that had taken place in the PE market, according to distributors.
"Somebody has to reduce production. PE is long," said one.
“I was very surprised by the [monomer] settlements,” said another. “Now we have to see how it will translate into the polymer.”
Some high density polyethylene (HDPE) grades have tightened in recent weeks, as length has been tempered by export opportunities and lower imported volumes, while other grades were considered to be long by the market.
Sources expected settlements to be done late this month, as buyers take their time to see the direction of the market.
Some saw it as a last-ditch attempt to raise prices before the onslaught of imports from new North American capacities, although most did not expect significant quantities from these new capacities before the end of the year, however.
PE is used in packaging, the manufacture of household goods, and also in the agricultural industry.
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