European PE producers looking to increase prices in June due to tight supply-demand conditions; Dow targeting hike of €100/tonne, other producers looking at €50-€80/tonne increase

Mathew Kearney

LONDON , June 19, 2013 (ICIS Chemical Business) – Producers of polyethylene (PE) in Europe are aiming for increased prices in Jun 2013, in view of tight supply-demand conditions. Dow Chemical is targeting a hike of EUR 100/tonne, while others are looking for more modest increases of EUR 50-80/tonne. Stringent production reductions and higher demand in May 2013 have led to the tightness in the market, particularly for low density PE (LDPE) and linear LDPE (LLDPE). Monthly prices of PE dropped by EUR 70-90/tonne by end-May 2013, with some sellers who made an initial offer of EUR 100/tonne cut, consistent with the drop in the May 2013 ethylene contract, eventually withdrawing it. Spot prices of LDPE reached highs of EUR 1300/tonne on a free delivered (FD) basis in northwest Europe (NWE) in May 2013, compared with EUR 1150/tonne FD NWE at the start of the month. The prices of LLDPE were also robust in view of reduced availability. The picture was more mixed for high density PE (HDPE). The tightest HDPE grade is HDPE injection, with prices being traded at above EUR 1300/tonne FD NWE, compared with a low EUR 1170/tonne FD NWE in May 2013. Spot prices of HDPE blow moulding are not increasing to the same level, probably due to the imports widely on offer in Apr 2013 and anticipation of higher offers from new capacity in the Middle East. Spot prices of HDPE blow moulding stood at EUR 1140/tonne FD NWE in early May 2013. Although trading at more than EUR 1200/tonne FD NEW on 3 Jun 2013, sellers were finding difficulty raising them to the same level as LDPE and LLDPE. Although PE monthly pricing is widely expected to increase in Jun 2013, buyers are doubtful about the duration of the upturn because increases would be determined by reduced output instead of strong demand. In recent weeks, some production in Europe has been reduced by as much as 30% in view of low demand. Prices of feedstock naphtha dropped to $825-829/tonne, including cost, insurance and freight (CIF), from a high of $845-847/tonne CIF NWE during the week ending 17 May 2013. A graph entitled, Europe polyethylene prices, shows spot FD NWE prices (EUR/tonne) for LLDPE, LDPE and HDPE from Jun 2012 to May 2013. Original Source: ICIS Chemical Business, http://www.icis.com/, Copyright Reed Business Information Limited 2013.

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