January PP and PE hikes seeing acceptance in Italy, LDPE films, HDPE films, LDPE producers

January PP and PE hikes seeing acceptance in Italy

12-Jan-11

In Italy, a round of increases passed on December done deals for PP and PE is followed by three digit increases in January spot prices due to higher propylene and ethylene contracts. As per Chemorbis, contracts were settled higher this month with large increases of €110/ton for propylene and €105/ton for ethylene. Based on players’ reports so far, sellers’ hike requests for January are meeting with acceptance despite partial revival of demand post-extended Christmas holidays across Europe. In the PE market, sellers who had closed their December PE business with increases of €30/ton for spot materials, are estimated to come with additional increases of €100-150/ton this month. Surging ethylene contracts, along with tight regional supplies especially for HDPE and LDPE and producers’ need to recoup their margins were amongst the main reasons behind the hefty PE increases. This week, a trader reported obtaining a €150/ton increase on his January done deal for Serbian LDPE film while another trader reported selling West European LDPE film with a monthly increase of €100/ton. One of the traders said he is seeing good demand for now, while the other stated that he expects to see healthier demand in the coming weeks claiming that most converters did not build high stocks before the holiday period. A packaging converter also confirmed paying €100/ton higher prices this week for his HDPE film transactions with Middle Eastern and West European suppliers. He said his end product business is not performing badly but he complained that it will still be difficult to pass this month’s higher costs to their end product prices. Italian PP buyers, who also faced similar increases of €100-120/ton for January after their return from long holidays, have shifted their attention to non-European supply sources. Seeing that higher propylene contracts, as well as strong naphtha and crude oil costs are supporting sellers in their hike pursuits, PP buyers, who already paid €20-30/ton increases on their spot deals last month, started to show interest on the low end of the spot market. Accordingly, this week a trader reported selling his Indian homo PP cargoes with a €100/ton increase from last month.