15 September 2008 15:43 [Source: ICIS news]
LONDON (ICIS news)--European producers are cutting back polyethylene (PE) production rates as prices fall due to very weak demand, market sources said on Monday.
“We will continue running at 50% at Fos,” reported a LyondellBasell company source, talking of low density PE (LDPE) output at its 110,000 tonne/year unit in southern ?xml:namespace>
“This will continue into October,” he added.
Saudi Basic Industries Corp (SABIC) announced last week that it was reducing its PE output in
Turkey's Petkim was running its LDPE 310,000 tonne/year unit at Aliaga at two thirds of capacity.
Other producers said they were assessing their output, given the severity of the reduction in PE demand seen in August and September.
Exact data were not publicly available but producers said they were shocked at the drop in new year-to-date demand figures.
One reported that it was seeing the worst demand it had ever recorded, while another said that it had seen the first ever fall in linear low density PE (LLDPE) growth.
“We are really facing a major erosion in consumption in
“We had thought we would see a recovery in the second half of 2008, but now nobody expects it,” he added.
Converters expected yet lower prices in the fourth quarter of 2008 as ethylene was widely expected to soften, bringing PE down in its wake.
Another PE producer was not so pessimistic over the mid-term prospects of PE.
“Yes, prices are falling. The buyers are doing their job. You hear every sort of price in the market,” a company source said.
“But what will happen is that we we’ll all cut back production, prices will be lousy and then when quarter one approaches, there won’t be enough availability and PE prices will shoot up. We’ve seen this film before.”
New production in the
LDPE spot prices had fallen to the mid-€1,300s/tonne ($1,857/tonne) FD (free delivered) NWE (northwest
PE suppliers in
($1 = €0.70)
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