(ICIS) -- European polyethylene (PE) and polypropylene (PP) buyers will face more upward price pressure in February if ethylene and propylene sellers realise the three-digit contract rise they are targeting for the month, market sources said on Thursday. ⌠I know the market doesn't like it, and there is nothing positive at the moment, but we have to look at the economics of polyolefins producers at the moment, said one large European polyolefins producer.⌠Everyone who produces based on naphtha is in deep trouble.
Cracker operators said current margins for them are unsustainable and a sizeable increase will be sought for the February ethylene contract, not only to recover margin lost since the January settlement but also to build in a buffer to protect against any further upswing.
The January ethylene contract settled at EUR1,120/tonne (USD1,436/tonne) FD (free delivered) NWE (northwest Europe), up by EUR40/tonne from December. The propylene contract was agreed up by EUR20/tonne at EUR1,105/tonne FD NWE.
Prices for both PE and PP have risen in January, but results of discussions have left prices well short of increases targeted by some producers.
Borealis had announced a EUR100/tonne hike, while Dow Chemical talked of plus EUR120/tonne. A third producer even spoke of a EUR140/tonne increase over December. January increases for PP monthly business have settled EUR40-50/tonne higher than December, however, while PE prices are up by EUR50-60/tonne.