Tightness, firm ethylene dominate December PE outlook in Europe
Spot ethylene prices inched up again following their hefty hike in the previous week, with the most recent spot prices standing around €180/ton above early November levels. Trading activities are said to be vivid in the ethylene market following the outage at Shell’s Moerdijk cracker, which is expected to resume operations in mid-December.
The recent surge in spot ethylene prices caused players to anticipate a higher monomer settlement for December. However, spot naphtha prices are still rather weak, hovering at around the $400/ton threshold on a CIF NWE basis, which might put a cap on the bullish expectations to some extent.
A West European producer closed their November PE contracts with increases of €40-50/ton from October, citing tight supply amidst good demand. In the spot market, the producer concluded some deals with increases of up to €50/ton from end October. A producer source commented, “Our supply is tight, especially for HDPE blow moulding. Our LLDPE availability is also dwindling. We will issue further hikes of €30-40/ton for buyers who ask for extra cargoes within this month.”
In Italy, a distributor sold out his November PE allocation with increases of €20/ton from October. For December, the seller reported hearing about possible hikes of €50/ton for PE as ethylene contracts are awaited higher. Several other distributors issued further hikes on their most recent PE deals compared to the beginning of November, pointing to short supply. A few buyers reported hearing about a new round of PE hikes for December following Shell’s outage. One of the buyers commented, “We faced difficulty in covering our needs this month due to tight supply. We anticipate further firming for December given the strong hike in spot ethylene prices.”
In Germany, a distributor sold out his November PE allocation with hikes of €40/ton compared to the beginning of the month. For December, the seller expects PE prices to rise further considering short supply and three-digit increases recorded by spot ethylene prices. Another distributor in France sold out his West European PE allocation up €30-50/ton from late October and added that he projects further hikes for the approaching month.
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