Over the past week, supported by the firm energy markets, spot ethylene prices in Europe, which had been tracking a mainly stable path since the beginning of February, recorded a weekly jump of €25/ton, as per Chemorbis. Amidst demand from derivative markets, along with firm crude oil prices, which managed to remain above the $80/barrel threshold during most of March, the stable spot ethylene values have strengthened anticipations of a higher ethylene contract settlement for next month. Taken as a bullish factor, the spot ethylene increase added to the firm April outlook in Italy’s PE market, where concerns of tightness regarding LDPE had already been in place, thereby providing ground for PE sellers to seek higher prices for another month. Most Italian PE buyers have met their requirements for March, as the month draws to an end.
According to players’ reports, March spot deals saw increases of €20-60/ton for LDPE, while HDPE deals were mainly concluded with rollovers so far due to weak supply-demand fundamentals. Due to the continuous tightness on LDPE availability across the region, sellers were able to fulfill their hike targets for this month, although they lacked support from Europe’s March ethylene contracts, which rolled over earlier in the month.
Under the influence of supply concerns regarding LDPE, along with the bullish speculations about next month’s ethylene settlements in Europe, early sell ideas have started to be revealed with additional increases over March in Italy’s PE market. The first move came from a West European major, Dow Europe, who made an official announcement that they would seek increases of €80/ton on contracts for LDPE and €60/ton for HDPE and LLDPE next month.
In the spot market, a trader offering a regular Middle Eastern origin expressed his April sell idea for LDPE with a €50/ton increase from March, blaming the short supplies and firming spot ethylene prices. Although other regular suppliers are yet to reveal their April hike targets, there is widespread talk amongst sellers that April will be a firmer month. A trader reported selling a good amount of LDPE with satisfactory margins this month after some discounts on their initial HDPE prices in order to achieve sales. “We expect to see further increases for LDPE in April, while HDPE may be held stable,” he commented.
Buyers also confirmed the firming sentiment on the sellers’ side, with many saying they were informed that LDPE prices would rise next month. A converter said they are expecting to see an increase on the April ethylene settlement and firmer PE prices as a result of the potential hikes for monomer contracts. More PE sellers are expected to approach the Italian market with their April sell ideas in the days ahead, with the majority of reports so far indicating expectations of firmer ethylene and PE prices particularly for LDPE which sees extra support from tight availability in the region.