Early talk of further PE hikes in March prevail in Italy, PE production, PE buyers, ethylene contract, ethylene prices

Early talk of further PE hikes in March prevail in Italy

16-Feb-11

In Italy, the spot PE market has been registering increases of €50-60/ton for February business, following the €100-160/ton increases that materialized in January, as per Chemorbis. The settlement of the February ethylene contract with a €25/ton increase caused European PE sellers to seek increases for a second month in a row. Not only the costs, but also tight supplies across Europe particularly for LDPE and HDPE have also pushed sellers to seek price hikes, with buyers confirming that producers’ allocations were not comfortable in H1-February. While February business will be mainly concluded next week, early speculations about further increases in March have already arisen in the spot market, with buyers also affirming that they have been hearing talk of additional hikes for next month. The month of March will kick off many scheduled cracker maintenances in Europe which are expected to keep ethylene supplies tight in the region, leading some Italian PE players to express concerns about supply for the coming months. “We expect to see further increases on PE in March. The scheduled maintenance shutdowns at several producers will affect the PE production,” a trader in Italy commented. Given the heavy turnaround schedule for March, the supply tightness is expected to remain in place next month too and for this reason, traders have expressed firmer PE sentiment for March. In the meantime, Italian PE buyers who have been forced to pay another round of increases for a second successive month are expressing discontentment with their end businesses, complaining about the difficulties in reflecting their incremental costs onto their downstream customers. The outcome of the ethylene contract for March is also likely to shape the market outlook. So far, spot ethylene prices, which can be considered as an indicator of the likely trend to be followed by the upcoming contract settlements, are currently standing €10/ton above the early February level in Europe.