LLDPE trades at a premium over HDPE in global markets

14-Apr-10
HDPE and LLDPE prices have been tracking different paths for the last few months in many global markets including Italy, Turkey, China and Southeast Asia, as per Chemorbis. Over the past couple of months, LLDPE sellers have stood on firmer ground as a result of tight supplies and better demand, while HDPE sellers, who continue suffering from comfortable avails aid low buy interest, continue with offers at stable levels or concede to some discounts. Besides maintenance turnarounds at LLDPE plants, limited supplies in the upstream chain is one of the main drivers behind the visible strength of LLDPE on a global scale, as tightening butene availability (a key component of LLDPE), depressed global LLDPE supplies further. This resulted in a wide gap between offers for these two products. April prices by regional suppliers in Italy were increased up to €50/ton for LLDPE on the back of tight supplies and higher ethylene contracts, while rollovers or slight increases of €10-20/ton were sought for HDPE. Sellers followed a similar pricing strategy in Turkey where the initial HDPE import offers decreased by US$40-80/ton but LLDPE prices rose by US$10-40/ton. Although the Chinese and Southeast Asian markets saw lower import prices this month both for LLDPE and HDPE under the impact of slower than expected demand and traders’ efforts to diminish their excess stocks, LLDPE prices maintained their premium over HDPE prices. The price difference between LLDPE and HDPE offers in Turkey appears as the largest compared to these other countries - LLDPE availability from its main suppliers has been restricted for over a month, with local distributors mainly offering en-route materials, whereas HDPE sellers are faced with low demand versus excessive local stocks. As a result of this situation, import LLDPE prices were offered with a US$95-150/ton premium over that of HDPE over the week, while the country’s local market witnessed a massive price gap of US$210-250/ton between the two products.
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