K 2019: Europe PE players prepare for key trade fair in uncertain market

European polyethylene (PE) buyers and sellers are preparing for one of the biggest events in their calendar in a very uncertain market.

- K 2019 begins on 16 October

- Imports to continue to impact Europe

The K Fair, which is held every three years in Dusseldorf, Germany, and is one of the biggest events in the global plastics calendar, with attendees from all over the globe.

2019 has been a difficult year for many PE players in Europe as new capacities come on stream particularly in the US, leading to low-cost, ethane-based competition for naphtha-based producers based in the region.

Traders have also found things hard, concerned over the risk of bringing in imported goods that will arrive weeks after the purchase date.

Add to this the uncertainty caused by the trade war between China and the US, in which some grades of US PE into China have had an import duty of 25% slapped on them.

Therefore, more imports from the US have been finding their way to Europe than were initially expected, having an impact on pricing.

The impact of the trade war is seen as a slowing factor for the general global economy by many.

Volatile crude oil prices have also lent uncertainty to the PE market in recent weeks.

Events in Saudi Arabia in September, with attacks to key oil facilities, led to a swift spike in Brent prices and, while crude has settled back down, geopolitical events are still leading to nervousness and caution.

Naphtha - derived directly from crude - is a principal driver of ethylene and PE pricing in Europe. New US PE production is mostly based on ethane.

UK WOES

The situation in the UK remains very unclear, with no clarity on what might happen when or if Brexit takes place at the end of October.

UK PE production comprises of SABIC’s large low density polyethylene (LDPE) plant in Wilton, and INEOS’ C6 (hexene based) linear low density polyethylene (LLDPE) plant at Grangemouth.

Prices have gone up slightly in October, following the €20/tonne increase in the European October ethylene contract, but many buyers are resisting price hikes as they see ample availability for almost all PE grades.

Early settlers have paid something of an increase, but retroactive buyers, who settle at the end of the month, said they are still aiming for rollovers.

Even in the light of these uncertainties, larger sellers declare themselves satisfied with current volumes, while smaller sellers and distributors have been reporting meagre demand, with hefty competition from imported material.

End-year volumes rebates, which often give a rebate on annual volumes once a pre-arranged targeted volume is reached, generally favour PE producers.

Against such a backdrop, K Fair attendees are likely to have a lot to discuss as they march round the halls, hopefully wearing comfortable shoes - the exhibition space occupies more than 300,000 square metres.

The K Trade Fair runs in Dusseldorf, Germany on 16-23 October.