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Europe PE buyers face Dec price hikes on higher feedstock

November 29/2010

(ICIS) -- European polyethylene (PE) buyers are facing yet more price rises for next month following a ?27/tonne ($36/tonne) increase in December's ethylene monomer contract, market sources said on Monday.

The average November naphtha cracker contract margin was on a par with that seen in March - and second only to January, the worst margin month in 2010 to date - following a sharp rise in naphtha prices and a drop in the dollar versus euro rate.

Dow had already announced a ?70/tonne increase for all its December PE sales before the ethylene contract was settled, and others now pitched in, anxious to recover increased costs.

This price hike announcement had been met with a great deal of scepticism by much of the market, but it was being followed by other producers who did not intend to lose margin further in December. With some grades of PE becoming increasingly tight, some sources said that it was not such an outlandish move after all.

Net LDPE prices for monthly business were around ?1,280/tonne, while spot prices were moving higher, above ?1,300/tonne FD NWE in some cases, where buyers could find no alternative supply.

High density PE (HDPE) grades were also getting tight, particularly HDPE injection melt flow index 7, and also blowmoulding. Some sources were beginning to wonder whether production had been cut back for these grades as the market was showing signs of shortage.


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