January PE prices in Europe have appeared flat or down from the previous month. While the delayed arrival of US goods has helped regional suppliers to some extent, the growing supply due to higher import supplies and low demand has particularly put pressure on commodities. LDPE and HDPE.

Quotes from nearby sources reduced

Although the price of European origin PE was mostly unchanged, the non-European origin PE appeared with a decrease in price compared to the previous month as sellers balked at the low demand and the improvement in supply. Weak momentum and the emergence of more competitive quotes from neighboring countries have put pressure on producers in the region.

Supply increases despite production disruptions

In Europe, outages for maintenance or other production problems have not had a clear impact so far. Some market participants attribute this to the fact that manufacturers have stocked up enough before maintenance. In addition, inventories are higher as distributors and conversion companies have been outstripping demand in previous months to minimize logistical disruptions.

In manufacturing news, Versalis closed its LDPE plant in Ragusa, Italy for planned maintenance from January 10 to February 28, while Dow declared force majeure on the following PE output. the closure of the cracker factory in Terneuzen, Netherlands.

Buying fatigue comes after relentless price spikes

Previous replenishment activity and a prolonged holiday lull led to a drop in demand in January. In addition, PE buyers in Europe were overwhelmed by strong gains in raw material prices and costs. energy.

The increase in energy costs is likely to have a new impact on downstream companies that want to operate at lower capacity to reduce their cost burden. Some market participants argue that this could even boost exports of end products to Europe in the long run.

US PE has a lower price than European origin

Contrary to a few months ago, US import PE prices now have a competitive advantage over European origin. The US price was slightly below the Italian spot price of 1730-1750 EUR/ton DDP, 60 days for LDPE film. Meanwhile, the US HDPE film delivered in March was quoted at EUR 1500/ton.

Omicron appears to be becoming the dominant variant globally, which further impacts logistics disruptions due to lack of truck drivers, reduced manpower and sluggish port operations. The ongoing logistic backlog has limited the flow of imports from the US, and the arrival of these shipments has been delayed several times. Despite the ongoing logistical challenges, many US PE cargoes are set to arrive on European shores in February.

Europe preserves its attraction for importers

Since Europe offers the most attractive profits, it is clear that importers will have an incentive to sell in this market. The ChemOrbis Price Index shows that spot LDPE prices in Italy and Western Europe remain at all-time highs even though they have slipped from peaks a few months ago.

PE prices across Europe have a large spread compared to other global markets as markets in the region remain isolated by logistical barriers.

As per the chart below, the price of LDPE film in Italy's domestic market is traded at a large spread relative to other markets. Imported LDPE prices are reported in China, Southeast Asia and Turkey in CIF, cash, excluding any customs clearance and inland shipping costs.

Traditionally, Italy has commanded higher prices than other markets because the country's domestic LDPE prices are for express delivery including all taxes if applicable and the cost of delivery to the buyer's factory.