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European PE market heads for hikes for third straight month

by Manolya Tufan -
  • 30/04/2019 (09:20)
In Europe, trading activities were disrupted by several holidays during April while the firming trend of PE is likely to be extended into May. This is supported by firmer projections for May ethylene contracts. Relatively tighter supply for some PE grades are also fuelling the firmer expectations.

European C2 hits 7-month high

Spot ethylene prices in Europe rose on the back of strengthening energy markets. Several unplanned cracker outages and planned maintenances around the corner also added to the bullishness of spot ethylene.

According to ChemOrbis Price Wizard, the European ethylene market had been on a firming trend for around three months before hitting around 7-month high on average in April.

Players shared expectations to see €30-50/ton hikes in the imminent monomer settlement.

May set to mark 3rd consecutive month of hikes

PE players are bracing themselves for another round of hikes in May. PE prices rebounded as of March following a weak start to 2019 and have risen for the past two months.

According to ChemOrbis Price Index, PE film prices hit nearly 5-month high during April. Data reveal that LDPE, LLDPE and HDPE film prices both in Italy and Northwest Europe reached their highest levels not seen since around November 2018 on a weekly average.

According to players, now it’s a question of how far PE prices will move north in May.

Size of PE hikes under discussion

Sellers mostly think that PE producers might announce hikes that go beyond the outcome of May ethylene contracts in order to improve their margins amid unplanned PE outages across the region and higher costs.

A trader said, “We expect increases of €40-50/ton in the next ethylene contract while our supplier might approach the market with larger hikes owing to his tight availability.”
Others, meanwhile, expect increases in line with the monthly monomer hike to be reflected on PE deals. “Ethylene might settle €30-50/ton higher and we expect the same size of increases for PE in May,” a distributor affirmed.

Plus, the size of the increases may also vary on the grade of tightness, some players argued. According to them, LDPE supplies remain tight.

Will demand seasonally pick-up?

Demand is expected to play an important role in defining the size of the increases. Players shared their expectations to see better demand in line with the beginning of high season for agricultural applications.
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