Europe PE set to fall in line with lower oil, demand

11 September 2008 13:49  [Source: ICIS news]

LONDON (ICS news)--Europe polyethylene (PE) prices are on their way down, with buyers looking for reductions of €50-100/tonne for September business as oil shifts below $100/bbl and demand falters, market sources said on Thursday.

Most September PE business was still under discussion, but buyers were pushing for big reductions in spite of producers' remonstrations that they were still working with high third-quarter ethylene monomer prices.

“We are pushing for a drop of €50/tonne ($70/tonne) in September, but we haven’t settled anything yet,” said one buyer.

Added another: “We haven’t settled yet but we are looking for a decrease of €60-100/tonne for our linear (low density polyethylene) this month.

“They have been pushing increases on us for months, now it’s our turn."

Low density PE (LDPE) monthly prices rose by almost €300/tonne between January and August to their high of €1,570/tonne FD (free delivered) NWE (northwest Europe) on a gross basis.

Several producers admitted that they were concerned that some of their converters would find it hard to survive under the harsh economic conditions that were now hitting European economies.

They generally accepted that they would have to reduce prices in September but argued that anything more than €30-40/tonne down was not feasible.

“It’s true that the market is a lazy market,” said one major PE producer. “But we are still working with the Q3 ethylene price.”

Discussions were expected to continue over the next week, with both buyers and sellers aware that prices would retreat further in October.

PE suppliers in Europe include Saudi Basic Industries Corp (SABIC), LyondellBasell, Borealis, Polimeri Europa, Dow, Repsol, Total Petrochemicals and INEOS Polyolefins.

($1 = €0.71)

Click here to find out more on the European polyethylene margin report
For more on PE visit ICIS chemical intelligence
To discuss issues facing the chemicals industry visit ICIS connect

By: Linda Naylor
+44 20 8652 3214

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