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European PE sellers trim hike targets for October

  • 14/10/2016 (03:40)
PE suppliers in Europe approached the market with hike requests pushed by higher ethylene contracts for October. However, calm demand amidst sufficient availability as well as unresponsive ethylene prices against surging crude oil prices forced sellers to step back from their initial price targets in the region.

A West European PE producer is seeking €15/ton increases on its LDPE, LLDPE and HDPE offers. A source from the producer admits, “We expect to conclude our deals with rollovers though.” An agent of a different producer slightly lowered its HDPE prices from September in a bid to conclude sales citing slack demand, while asking for rollovers for LDPE. “We tried to maintain our price levels on the month while buying interest is weak so far this month,” a distributor of a South European source said.

In Italy, a distributor complained about discouraging demand, saying, “We are struggling to make sales even after our slight discounts for HDPE and LLDPE compared to September. LDPE is drawing a firmer picture with respect to other products though due to tight supply.”

A packager in Italy is confident that he will pay rollovers for October LDPE cargos despite his supplier’s €15/ton hike announcement and relatively limited availability for this product. Another converter in the country said, “We have received many offers with rollovers or even small discounts from last month, particularly for HDPE film grade. We are yet to purchase any materials and we plan to meet our basic needs next week.”

In Germany, a compounder similarly noted, “We paid mainly rollovers and even some small decreases on our October PE deals in the spot market. Our end business is performing well, meanwhile.”

In France, a distributor managed to conclude some deals with rollovers for various PE grades. “We hold softer expectations for the November-December period as demand was depressed recently,” stated the seller.

Not only subdued demand but also unresponsive ethylene costs cast a shadow on the PE outlook nowadays. Comfortable ethylene supplies draw a soft outlook for the last quarter of the year, according to some players. ICE Brent crude oil futures gained almost $3/barrel since October started amidst talks of an output reduction from OPEC. Spot ethylene costs in Europe, however, represented a drop of around €10-15/ton on FD NWE basis week over week. Spot naphtha prices also recorded a slight softening in the period on CIF NWE basis.
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