Softer ethylene casts shadow on PE hike targets in Europe

05-Sep-11

Though the monthly ethylene contract settled with €5/ton decreases, some major European producers including Dow Europe, Ineos and Sabic have talked of price hike intentions upto €50/ton, as per ChemOrbis. They mainly blamed thin margins for their hike decisions. The upcoming turnarounds planned for September and October at Dow and Ineos are also helping them express bullish views for the near term, highlight players. However, the rest of the market is not so optimistic about the fulfillment of these hike targets. When looking at the Italian market, rollovers to €10/ton increases are being sought in many accounts for September gentlemen’s agreements while the spot market is mostly seeing stable prices from the end of August. Right after the summer holidays, some sellers were hopeful that demand would improve with buyers’ stock replenishment. Nevertheless, the softer outcome of the ethylene contract, as well as, unsatisfactory demand, appears to have cast a shadow on their firm expectations. A distributor said, “Buyers are in a waiting stance as most have already purchased some volumes at the start of August to secure some cargoes for the post-holiday period.” Another distributor commented that demand is not great for now as buyers are yet to return from their summer holidays. A trader who reported selling September shipment cargoes for West European LDPE and LLDPE at a rollover from his initial August level mentioned that he expects to see price cuts in the coming term, considering the concerns about the global economies. Therefore, he wants to achieve smooth sales before prices start to fall. A trader reporting his sell ideas for Middle Eastern LLDPE at stable prices from August is waiting to see new prices from his Middle Eastern supplier, who he thinks will offer rollovers for September. “Most market players remain on the sidelines, which is also because most buyers still have sufficient stocks that will be enough for their production for the next few weeks. Therefore, they are not in a hurry to purchase,” he commented. On the buyers’ side, a cable manufacturer reported that he expects to see a mostly stable trend with possible slight discounts this month. A compounder, who also received steady prices for this month, said that he will probably close this month’s deals at a rollover.