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Polimeri Europa closed its European PE order books for January

January 20/2012

(ICIS) -- Polimeri Europa has closed its European polyethylene (PE) order books for January as buyers flock to the market to get hold of more material ahead of an almost certain hefty price hike in February, a source at the Italian major producer said on Friday. We cant allow pre-buying in a market where prices will be up sharply next month. The current spread between naphtha and PE is absolutely unsustainable, said the source.

Polimeri Europa closed its European PE order books for January
The market uncertainty of the fourth quarter of 2011, when spot PE prices were done at selected accounts well below the ethylene contract price, still holds for the long-term outlook, but there is now some clarity for the first two months of 2012. The January ethylene contract price rose by EUR40/tonne (USD51/tonne), leading to increases of around EUR50/tonne in the early January PE market. Expectations are now for a much bigger hike in the February ethylene contract, with PE producers expecting a three-digit increase next month.

They will inevitably attempt to recover this in their own PE market, as crude oil and naphtha prices have continued to exert heavy upward pressure on their own costs. Cutbacks in PE production across the board mean no surplus of material and attempts to pre-buy all grades of PE are now being thwarted by producers whose costs continue to rise and are expected to go up further in February.

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