Tightened LDPE, LLDPE availability driving better-than-expected European PE demand in March, tighter HDPE supply driving firmer spot prices; tightening European PP supply causing production cutbacks as monomer contract prices expected to increase in April

LONDON , April 16, 2014 () – In Europe, a key polyethylene (PE) producer is seeking a EUR 40/tonne hike in Apr 2014, on the back of tight supply and unsustainable margins, in spite of the EUR 15/tonne decrease in ethylene contract in Apr 2014. Other producers are being cautious and have yet to release their targets. Several sellers have planned increases with one seller aiming for a EUR 20/tonne increase over Mar 2014 prices. Mar 2014 demand has been better than expected and availability of low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) has considerably tightened. High density polyethylene (HDPE) spot prices have also become firmer on tighter supply. Market for HDPE market has been weak for many months. The present tightness was put down to the better-than-expected demand recorded in Mar 2014 but also to less imports entering Europe since duties from GCC countries increased from 3% to 6.5% on 1 Jan 2014. In 2H Mar 2014, spot prices of PE increased, as crude oil prices sharply increased on tensions in Ukraine. Buyers are purchasing at attractive prices offered by suppliers in Europe. Net prices for LDPE are now reaching EUR 1300/tonne FD (free delivered) NWE (northwest Europe) from EUR 1230/tonne FD NWE in 1H Mar 2014. Spot prices for HDPE film and blowmoulding rose by EUR 20-30/tonne from below EUR 1200/tonne at large accounts. LLDPE C4 (butene based) prices have also increased to EUR 1260-1270/tonne FD NWE, following negotiations at EUR 1220/tonne earlier in Mar. Europe's polypropylene (PP) players are anticipating settlement of Apr propylene contract to have basis for Apr PP pricing. The PP sector has become more unstable as monthly propylene prices were established in the European market. Tightening PP supply in Europe has been put down to a tight propylene market, causing production cutbacks. Several other more serious production concerns are now being addressed. Negotiations for Apr monomer contract price are set to begin soon. Price increase is highly expected; however, players maintain a close eye on naphtha movements. Imports of PP have also been weak in recent months. Mar spot prices for homopolymer injection PP are stable at EUR 1250-1270/tonne FD NWE. Current contract price for propylene monomer is at EUR 1130/tonne FD NWE.

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