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A new game-changer in Europe’s PE market: US imports

by Manolya Tufan -
by Esra Ersöz -
  • 02/12/2019 (08:00)
So far in 2019, US PE has arrived in Europe as a new game-changer with overall PE imports in the first three quarters already passing the full imports of the previous year. Players argue that more US PE cargos will head to Europe in 2020, gaining further market share and exacerbating the pressure on the regional suppliers.

Local PE prices post drastic drops on average thru 2019

As can be seen on the ChemOrbis Product Snapshot below, local PE prices both in Italy and Northwest Europe have posted large drops during the course of 2019. As of the last week of November, spot LDPE, LLDPE and HDPE prices stood at their lowest since 2009 on a weekly average, according to ChemOrbis Price Index.

*Right click the image and open in new tab to view the full-sized snapshot.

US PE offers competitive edge

With the US and China locked in a trade war, tariffs on US PE imposed by China has changed import flows. Although both countries claimed progress on a "phase one" deal, differences on the removal of tariffs were reported be stalling deal.

Although new PE capacities in the US were originally intended to be exported to China, an influx of US PE cargoes happened to have found their way to Europe and Southeast Asia after Mexico and South America so far in 2019. Offering competitive prices in large amounts, particularly in the last quarter as a part of destocking activities, they contributed to the price erosion across the board.

In Italy’s local spot market , US LLDPE offers are currently standing below the €900/ton threshold, according to players. The emergence of these aggressive offers weighed further on spot PE markets.

Across Northwest Europe, meanwhile, much more aggressive LLDPE and HDPE film offers were also heard, albeit not widely confirmed, in the range of €800-850/ton in Germany and Belgium.

Nearing year-end dents interest for US PE

Although very competitive US cargoes are there, sellers’ high inventories and the short month of December in terms of working days are now keeping buyers hesitant to engage in new purchases for this origin. Buyers may feel more encouraged to buy from their contractual suppliers to fulfill their yearly commitment.

US suppliers raise market share, with eyes on more

Statistics suggest that there is an increase of 150% in overall PE imports from the US to the EU28 in the first three quarters when compared to the same period of last year. Also, the three quarterly imports already exceeded the full imports of 2018 by 60%. That is to say, it is highly likely that overall PE imports from the US to the EU in 2019 will be more than double of the year 2018 when the Q4 data is revealed.

A major market participant said, “US PE became prevalent particularly in Southern Europe. The PE market is likely to face continued headwinds for next year as US suppliers may try to increase their market share in the rest of Europe. They target the UK, after Brexit in particular.”

Italy’s PE imports from US up sharply

US PE imports to Italy surged drastically for LDPE, LLDPE and HDPE film during January-September period compared to the same period of 2018. Although the yearly increase seems astronomical in percentages, the share of US is still not considerable in Italy’s overall imports, at least for now. Increasing imports from the US may push regional suppliers to make a choice between margins and market share particularly in the HDPE market in the next few years.

As for mLLDPE, meanwhile, the US already became the top supplier of Italy with around 50,000 tons in January-September period. This figure indicates an increase of 24% from overall imports for 2018.
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