Switzerland-based Ineos said Wednesday it will limit its polymer price reduction in July to Eur70/mt ($88/mt), way below the Eur170/mt cut in the cost of feedstock ethylene and propylene.
Ineos said the move was due to what it considered "an over-correction in polymer pricing through May/June and the rapid escalation in oil/naphtha pricing currently underway." July contract prices for ethylene and propylene were settled Thursday at Eur1,035/mt FD NWE and Eur935/mt, respectively, down Eur170/mt from June, reflecting the weak energy complex and demand. Feedstock naphtha has risen steadily over the past several days, in line with the rebound in crude, hitting $800/mt CIF NWE for the first time Tuesday since May 30, Platts data showed.
Other polyethylene producers shared Ineos' pricing policy.
"We are looking to limit the decrease to two digits," one producer said.
Several polypropylene producers were aiming to keep the July CP reduction to around Eur100-150/mt, with the lower end of the range expected in the troubled southern European markets, including Spain, Greece and Italy.
A PP producer, however, said passing a Eur70-100/mt reduction on to their customers could be a "challenge" given the macroeconomic risks and the seasonal summer lull.
The low density polyethylene contract price ended June at Eur1,330-1,335/mt FD NWE, a fall of Eur180/mt on the month, against an ethylene contract price fall of Eur120/mt.
For PP, June gross contract prices fell Eur185/mt to Eur1,315-1,320/mt FD NWE for homo injection grade from May, exceeding the propylene contract price reduction of Eur125/mt.
Polymer converters remained bearish about end-user demand, and were positioning to achieve the full monomer pass-through of Eur170/mt in their July contract prices.
