August was a disappointing month for European PE producers. They had hoped at least to pocket the nominal cost reduction of €20 ($22) per tonne in the ethylene reference price by pushing through an across-the-board rollover for PE prices and thus improve their margins.

But it was not to be, and also the quickly announced suspension of orders by some suppliers largely failed to meet their objective because, as many people suspected, there was sufficient material around after all.

Grades pressured by imports fell particularly heavily, while others were oriented more to the reference price.

Towards the end of the month, the situation increasingly stabilised against the background of rising oil and naphtha prices, the gradual ending of the import season, and the generally expected rise in the cost of ethylene.

Surprisingly, the ethylene reference for September was carried over unchanged, which meant that the many premature calls by producers for significant increases — there was even talk of hikes of up to €70/t ($79) — seem very ambitious in view of the stable costs.

Consequently, many producers retreated to an increase of €40/t ($45) while others were even more modest, asking for €20/t ($22). Nevertheless, it seems questionable in many cases whether even a rollover will be obtained, especially with LLDPE and some types of HDPE.

data provided by PIEWeb