Ethylene supplies tighten as crackers go offstream

Processors face a round of increases in the price of polyethylene from the beginning of next month as rising feedstock costs combine with a high rate of plant utilisation and tightness in ethylene supplies.

Dow Europe has announced a rise of €120 a tonne from September 1 for its polyethylene portfolio while Sabic Europe will put levels up by €100 a tonne.

A senior Dow executive points to stronger than expected PE demand in the past two months in a year which sees little new capacity coming on stream. A series of maintenance turnarounds coupled with some unscheduled cracker outages have restricted ethylene supplies to the point where some buyers are on allocation and spot prices have soared to the €1,100 a tonne area, leaving little margin for polymer manufacture, he says.

At Sabic Europe, LDPE/LLDPE business unit director Huub Meessen, says: “European and Asian PE markets have tightened considerably over the summer period. We estimate industry stocks to be low and expect them to stay low. The high level of feedstock costs will remain.”