LONDON (ICIS news)--UK polyethylene (PE) buyers are facing further upward pricing pressure this quarter despite signs of slower activity in mainland Europe as sellers attempt to bring them in line with their continental counterparts, market sources said on Monday.
We will stop selling to the UK if we can t get the same price as in mainland Europe, said a major PE producer. We aim to get prices in line by the end of March.
The pound sterling continued to be weak against the euro, and was valued at EURO 1.33 on Monday, down from its early September 2007 level of EURO 1.48.
In January, PE buyers Europe-wide paid hefty hikes as first-quarter ethylene rose EURO 78/tonne (EURO 113/tonne) and product availability looked tight.
Increases of up to EURO 70/tonne were not unusual, leaving low density PE (LDPE) in the mid-EURO 1,300s/tonne FD (free delivered) NWE (northwest Europe), according to global chemical market intelligence service ICIS pricing.
UK buyers faced different pressures due to the weakness of their currency, however, and they have been under consistent heavy pressure to accept hikes to bring them in line with their European counterparts.
In January as well as February, UK buyers have taken a heavy hit on PE prices, moving up 80-100/tonne, compared with EURO 60-80/tonne for most mainland European buyers, and they were to face yet more increases in March.
Gross February LDPE in mainland Europe was at EURO 1,345-1,365/tonne FD NWE, while UK LDPE prices were at 970-980/tonne FD, equating to EURO 1,290-1,303/tonne FD.
This is becoming a problem on more than one level, said another producer. We are losing money selling into the UK, and our European buyers are beginning to ask why we are selling to UK buyers cheaper than to them.
UK buyers generally acknowledged that prices had to increase, but they were surprised at the intransigence of sellers.
We have taken a huge hit in both January and February, said one major PE buyer in the UK.
We have managed to get back some of the increase but we are lagging behind. If we have to take yet another big increase in March, it will be very hard for some converters. It is beginning to hit cashflow.
The momentum of the Eurpean market began to slow in early February, and while some grades of PE remained tight, particularly C4 linear low density PE (LLDPE), hikes were reported at a maximum of EURO 20/tonne in mainland Europe, with many buyers enjoying a rollover from January.
Producers were still aiming to hike prices but many had already settled for a rollover for February and buyers saw little likelihood of higher prices in March.
Spot ethylene was still weaker than contract pricing and many PE converters expected a lower second-quarter ethylene monomer contract which would inevitably impact PE pricing.
PE producers were not so sure that second-quarter ethylene would decrease, however.
We have seen oil and naphtha climb back up again. I simply can t see cracker operators allowing margins to erode any more, said another major PE producer.
European PE producers include Borealis, Dow, INEOS Polyolefins, LyondellBasell, Polimeri Europa, Repsol, SABIC and Total Petrochemicals.
We will stop selling to the UK if we can t get the same price as in mainland Europe, said a major PE producer. We aim to get prices in line by the end of March.
The pound sterling continued to be weak against the euro, and was valued at EURO 1.33 on Monday, down from its early September 2007 level of EURO 1.48.
In January, PE buyers Europe-wide paid hefty hikes as first-quarter ethylene rose EURO 78/tonne (EURO 113/tonne) and product availability looked tight.
Increases of up to EURO 70/tonne were not unusual, leaving low density PE (LDPE) in the mid-EURO 1,300s/tonne FD (free delivered) NWE (northwest Europe), according to global chemical market intelligence service ICIS pricing.
UK buyers faced different pressures due to the weakness of their currency, however, and they have been under consistent heavy pressure to accept hikes to bring them in line with their European counterparts.
In January as well as February, UK buyers have taken a heavy hit on PE prices, moving up 80-100/tonne, compared with EURO 60-80/tonne for most mainland European buyers, and they were to face yet more increases in March.
Gross February LDPE in mainland Europe was at EURO 1,345-1,365/tonne FD NWE, while UK LDPE prices were at 970-980/tonne FD, equating to EURO 1,290-1,303/tonne FD.
This is becoming a problem on more than one level, said another producer. We are losing money selling into the UK, and our European buyers are beginning to ask why we are selling to UK buyers cheaper than to them.
UK buyers generally acknowledged that prices had to increase, but they were surprised at the intransigence of sellers.
We have taken a huge hit in both January and February, said one major PE buyer in the UK.
We have managed to get back some of the increase but we are lagging behind. If we have to take yet another big increase in March, it will be very hard for some converters. It is beginning to hit cashflow.
The momentum of the Eurpean market began to slow in early February, and while some grades of PE remained tight, particularly C4 linear low density PE (LLDPE), hikes were reported at a maximum of EURO 20/tonne in mainland Europe, with many buyers enjoying a rollover from January.
Producers were still aiming to hike prices but many had already settled for a rollover for February and buyers saw little likelihood of higher prices in March.
Spot ethylene was still weaker than contract pricing and many PE converters expected a lower second-quarter ethylene monomer contract which would inevitably impact PE pricing.
PE producers were not so sure that second-quarter ethylene would decrease, however.
We have seen oil and naphtha climb back up again. I simply can t see cracker operators allowing margins to erode any more, said another major PE producer.
European PE producers include Borealis, Dow, INEOS Polyolefins, LyondellBasell, Polimeri Europa, Repsol, SABIC and Total Petrochemicals.
