Rising Ethylene Costs Firm Outlook for Polyethylene in Europe for February
28 Jan 2010 • by Natalie Aster
Persistent derivative demand amid limited supplies has been pushing up ethylene prices as spot prices have risen by about €80-85/ton this month in Europe. As per Chemorbis, despite recent losses in the energy markets, firmer ethylene prices were seen in Europe, supported by supply concerns due to cracker problems in the region. European players started monthly ethylene contracts with increases this week, in line with rising spot prices and narrowing cracker margins in the region. An initial February ethylene contract was settled with an increase of €70/ton (US$99/ton) vs January at the level of €940/ton, surpassing the €30/ton hike seen in the January settlement. The increase came despite weaker crude oil prices, which retreated below the US$75/barrel this week.
Prior to February monomer settlements, early sell ideas for February had already emerged in the downstream PE market, with two large West European producers announcing new price hikes of €100/ton for next month. Plus, a South European PE producer, who already obtained €70-80/ton this month, has also started to ask for another €100/ton increase for February, which confirms the speculations for a firmer February outlook. Combined with higher costs, expectations on the sellers’ side that purchasing activities will pick up soon as Italian buyers will need to secure new cargoes also prepared a firm ground for sellers’ confidence.
PE producers have already achieved significant price hikes in Europe for January, taking support from higher upstream costs, overall limited supplies and the global rising trend. Responding to higher January ethylene contracts, major PE producers in the region initially issued price hikes of €100-120/ton month on month following the New Year holidays in an effort to improve their margins. Although demand was not supportive in the first half of the month, as most buyers had bought their needs last month so as to avoid getting caught by the increasing trend without stocks, sellers remained firm with their offers over the course of January, with several regular PE suppliers reporting that they are already sold out. In Italy’s spot PE market, where suppliers initially came with noteworthy price hikes over last month, large increases ranging between €70-100/ton have been passing on January deals for the last few weeks. A trader, who is almost sold out for January, reported that they expect to see minimum increases of €50/ton next month now that almost all producers voiced their intention to raise their prices further. The trader’s comment was also confirmed by a buyer, who reported being warned by their suppliers that they had an intention to raise their February prices further. The increase talks for next month were reported in the spot market between €50-100/ton prior to February ethylene contract settlements, according to players’ reports.
Source: Plastemart
More reports available on the product:
Ethylene Market Research (China)
Trends and Prospects in International Trade in Ethylene
Ethylene: 2009 World Market Outlook And Forecast
Polyethylene (LDPE, HDPE, LLDPE) Market Research
POLYETHYLENE (CAS 25213-02-9) Market Research Report 2009
POLYETHYLENE (CAS 9002-88-4) Market Research Report 2009
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