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Increases on PE deals outpace ethylene hike in Europe

  • 19/04/2016 (18:12)
The European PE market maintains its upward trend this week as increases beyond the €60/ton gain in ethylene contracts are passing on April PE deals given the prevailing supply constraints stemming from a number of outages in the region.

A distributor in Italy concluded some spot PE deals with increases between €90/ton and €110/ton from March. The seller said that HDPE blow moulding availability from his West European supplier is quite short due to a maintenance shutdown while commenting that demand hasn’t been brilliant this month.

A packaging producer reported purchasing some locally-held Middle Eastern cargoes at competitive levels earlier in April, but added that such prices are no longer available in the second half of the month. “We heard mixed expectations for May. Most players are talking about further price hikes while a few others think that a stabilization is possible,” he commented. Another converter in Italy reported buying non-European LDPE film at higher levels recently with respect to his done deal levels for European origins at the beginning of April.

Several distributors in Germany reported price hikes from €70/ton to beyond €100/ton on April PE deals in the spot market, commenting that supply continues to be tight.

Some PE plants are set to return to production amidst ongoing reports of tight availability in the market. LyondellBasell’s 320,000 tons/year LDPE plant at Aubette, France is expected to resume operations nowadays following an over 40-day maintenance. Czech Unipetrol’s HDPE plant at Litvinov was shut for turnaround in mid-March. The 320,000 tons/year plant will be restarted in late April. Market sources reported that Total lifted the force majeure on their HDPE supply from their site in Feluy, Belgium. The company had declared a force majeure on April 6 due to a trucker strike in the region.

However, many players across Europe are arguing that supply levels are unlikely to improve in May considering a number of ongoing outages. Market sources reported that Versalis’ force majeure on LDPE from Italy remained in place in mid-April.

Ineos was expected to conduct a maintenance shutdown in Belgium between April and May while some players reported that the shutdown would take place next month. The company has an HDPE capacity of 440,000 tons/year at Lillo.
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