European polyethylene supply tightness expected to extend into April: sources

New York — European polyethylene suppliers expect supply tightness to extend into April before easing from May as US exports flow again following the restart of Gulf Coast facilities, leading to a drop in the currently elevated PE prices.

Benchmark spot LDPE was assessed at Eur1,970/mt FD NWE March 23, unchanged from March 22, according to S&P Global Platts data, reaching all-time highs in March on the back of reduced global supply and fewer exports due to lockdowns in the US.

"In April we assume that the tightness will reach the peak, as we are hearing that all the US producers are slowly starting up their plants...From what we've heard, quantity ex-US will still be limited in April...They told us that they estimate producing and shipping out bigger lots in May which would mean that those parcels would land in Europe in June," a Europe-based trader said.

Most US Gulf Coast petrochemical plants that were shut when freezing temperatures hit the region in mid-February have resumed operations or expect to restart by the end of March.

ExxonMobil Chemical Co. has restored all of its US Gulf Coast production capacity, the company said in a letter to customers March 22 seen by S%P Global Platts. EMCC plants include locations in Baton Rouge, Louisiana, and Beaumont and Mont Belvieu, Texas.

"It's an availability game, there's no availability and no one has the possibility to hold off [purchases]. For April we already have many, many orders so may have to impose stock order stops early," a European producer source said. "Maybe in some areas if we had the capacity to produce [more] polymers; it may be limited. There might be some imports [but] the US has started up slower than anticipated so it will take some time for imports to arrive."

However, converters, struggling to contend with the record high prices seen since the end of February, said producers could face some push-back in April.

"Demand is still very high despite increasing prices. However, some converters will reduce remaining stocks," a second trader said.

One converter said it had stopped purchasing spot volumes, suggesting that stocks in hand were sufficient for April.

"Consumers are concerned about price. Prices are too high. A lot of customers say they prefer to wait," the converter said.