European PE opens post-holiday period on firm note, buyers stay cautious

http://www.petrotahlil.com/en/tiny/news-43824

Petrotahlil :PE players in Europe have just started to return from holidays while they came upon a turbulent market on a global scale. A geopolitical tension in the Middle East led a short-lived spike in global oil prices earlier this week, while initial PE offers disregarded stable monomer contracts.

Italy’s PE market ended 2019 with prices below C2 contract

Italy’s local PE market stood at multi-year lows heading to the year end under an intensifying pressure from competitive import cargos and stock clearing on the side of sellers. According to the weekly average data from ChemOrbis Price Index, LDPE and LLDPE film traded below the ethylene contract level of €970/ton in that period.

Initial PE prices defy unchanged ethylene settlement

Now that players have started to return to their desks after almost a two-week long holiday, some PE producers unveiled monthly increases of up to €50/ton for January. This pricing policy was caught by surprise, according to some participants, as it shrugged off stable ethylene contracts in Europe.

Sellers aim to recoup margin losses in Q4

PE suppliers are willing to recoup their margin losses which they suffered in the last quarter of 2019. An agent of a West European producer noted, “We hope to obtain €20-30/ton increase, at the very least.”

Firm signals for US PE support sellers

American PE prices faded in the import market after sellers depleted their stocks in December. Most US sources are avoiding disclosing their new offers nowadays while they are readying to approach export markets with increases.

A player in Europe opined, “Firm signals from the US are supported by restricted export volumes from the country. Higher US prices could provide support for European PE market in the coming days.” Reports in Turkey corroborate this view as US PE offers on CFR Turkey basis moved visibly higher on the week due to a lack of new supply and supportive upstream chain.

Factors that cloud hike targets

Nevertheless, several converters in Europe expressed their plans to push for discounts when it comes to their monthly negotiations. Abundant supply may probably curtail increase targets, as a buyer put it.

“Activity has not picked up so far. Some buyers may have built stocks in December in an attempt to achieve their year-end rebates,” marked a local reseller in the region.

On the top of this supply-demand scene, the recent reverse in energy complex has left a question mark over minds regarding the workability of PE hikes in Europe. Global crude futures saw a downward correction after sharply surging earlier this week since Middle East tension has recently calmed down.

Source :ChemOrbis

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