Severe weather conditions continue to affect polymer business in Europe

15-Feb-12
Cold weather over the past few weeks has affected Europe’s plastics sector severely, as per ChemOrbis. Tough weather conditions, which worsened during the weekend, caused many upstream and downstream plants to freeze. Supply constraints on the suppliers’ side have triggered concerns across the region, providing sellers an upper hand while negotiating. PVC producers Solvin and Arkema suspended their production towards the end of last week. Solvin was obliged to declare force majeure on output from plants in Jemeppe, Belgium and Tavaux, France on Wednesday, with PVC capacity of 400,000-475,000 tpa and 240,000 tpa. The company announced that they are planning to lift the force majeure as soon as the weather conditions improve, according to market sources. Solvin’s force majeure was followed by Arkema;7’s on Thursday. The company also declared force majeure on the PVC output from its Berre plant in southern France with 290,000 tpa PVC capacity due to adverse weather conditions, according to market sources. “Deliveries from a Polish PVC producer are late due to transportation problems resulting from tough weather conditions across Europe,” a PVC compounder complained. A trader reported asking for new offers from a South African PP supplier this week after having purchased some cargoes from this supplier in late-January. “I am still waiting for deliveries from this particular seller as the supplier is facing some delivery problems because of bad weather,” the trader added. Converters in Italy have also been affected by freezing weather. Some buyers have restricted their purchasing volumes as harsh weather conditions have slowed their end product activity, while other converters reported delays in deliveries from their suppliers. “Because of tough weather conditions for the past few weeks, it is really difficult to maintain our end production as delays are inevitable on our deliveries,” a PVC pipe producer reported this week. “We are receiving a reduced number of orders for our end products these days. As our end product demand is poor, our monthly needs are lower. Thanks to this situation, we were able to meet all of our monthly needs from the spot market. If we had needed larger volumes, we wouldn’t have been able to find enough material as PVC supply is really tight in the spot market this month,” a PVC cable extruder also commented. “We purchased a very small amount of PP cargoes this month in order to avoid paying large price hikes because our end product demand is slowing down. As most of our customers are located in the center of Italy, where businesses have been severely affected by winter weather, their purchasing volumes have decreased recently. Therefore, we are purchasing on a needs only basis for now even though we are hearing about further price hikes in March,” a compounder had reported. “We received new homo PP offers with strong increases compared to the January done deal levels. This month, we will not purchase any homo PP volumes as we still have sufficient stocks left over from January. Plus, our end product business is slowing down because of the bad weather conditions which are affecting our production,” another compounder had stated. “After purchasing some HDPE film volumes at the beginning of this month below the level of €1300/ton FD Italy, we are not interested in new purchases for now. Our end product business is not performing well due to a new Italian decree which strengthens plastic bag laws in the country by enforcing large and costly sanctions. Plus, we faced problems with our production last week due to heavy snowfall in the region,” a PE packaging producer stated this week. A source at a PS producer also admitted that they are not seeing good demand from buyers this month. “We concluded deals with our large scale customers with €120/ton increases over our late January done deals. Demand is not great this month. We attempted to raise the premium on HIPS over GPPS this month but it is not easy to convince converters to accept the increase on HIPS,” the source added.
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