Market and product

Polyethylene (PE) players in Europe are watching price movements in Asia to be able to gauge how imports will be moving in the coming weeks, sources said on Monday.

Asian high density polyethylene (HDPE) film prices have risen from a low of $1,030/tonne CFR (cost and freight) South East Asia in mid-January, to trade within a band of $1,140-1,190/tonne during the week ending 18 March, according to ICIS data.

European HDPE film spot prices are at €1,240-1,250/tonne DDP (delivered duty paid), also up, from €1,200/tonne in early March.

Linear low density polyethylene (LLDPE) prices were following the same trend.

South East Asian LLDPE C4 (butene based) prices have increased sharply, to $1,140-1,230/tonne CFR, while European levels, although firmer than earlier in 2016, were still in the mid-€1,200s/tonne DDP.

The above graph shows the mid-point of south east LLDPE CFR Asian and European DDP prices during the week ending 18 March, showing a gap of $245/tonne between the regions.

At the end of December 2015, the gap was $437/tonne, with European prices higher than those in Asia.

In June 2015 the gap was as high as $461/tonne, using the mid-point of ICIS LLDPE south east Asian prices against European FD (free delivered) NWE (northwest Europe) mid-point levels.

Such a change would clearly make importers begin to consider which was the more attractive market to target, said producers, and some felt the wave of imports seen in Europe would be coming to an end.

Imports have not just been arriving from Asia or the Middle East, however. Exports from North America have been offered on a widespread basis in 2016-2016, with commodity blowmoulding grades in particularly good supply.

A swathe of upcoming shutdowns in the USA and a swift turnaround in market dynamics there has led to higher offers from this sector but prices were still considered to be around 47-48 cts/lb for exports last week.

Asian prices are going up, US buyers are also facing a price hike in April, and European buyers are also expecting to face a price hike in April, as ethylene tightens and firms and crude and naphtha strengthen.

There is still caution and uncertainty and many buyers are unsure over how to budget for the year.

“Global dynamics are extremely difficult to understand,” said a producer.

PE is used in packaging, the manufacture of household goods and in the agricultural industry.