26 September 2008 14:29 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS news)--Polyethylene (PE) volumes have slumped in 2008, with some players estimating a drop of as much as 7% in year-to-date volumes over 2007, sources said on Friday.
The slump in demand has led to a significant price drop in price levels in September, with lower indications already circulating for October.
Spot low density PE (LDPE) has dropped from highs of €1,500/tonne ($2,206/tonne) FD NWE in July, to their current level in the low-to-mid €1,200s/tonne FD NWE.
“Prices seem to be falling by the day,” said one LDPE buyer. “I have got a decrease of €80/tonne in September and my producer has already offered me minus €100/tonne for October.”
August saw the biggest fall-off in volumes, as sellers stood on the sidelines, watching oil slide from its July high of $147/bbl to well below $100/bbl.
Brent crude was trading at $101.98/bbl on Friday, but markets remained nervous, fuelled by the massive economic uncertainty in the global money markets.
Asian prices also fell dramatically this week, showing their biggest drop for 10 years. LDPE prices slid by $150/tonne, to $1,500-1,580/tonne CFR Asia.
September PE volumes in ?xml:namespace>
The new ethylene contract was settled at €1,120/tonne FD NWE, down by €108/tonne from the third quarter, and while demand was better than in August, there were no significant signs of improvement.
“We were expecting a strong October,” said a major producer, “but it’s just not happening.”
Not all producers were completely pessimistic.
“Demand cannot remain so poor,” said another major PE producer.
“We simply cannot see three months of such weak volumes. October will improve. PE demand normally tracks GDP and nobody is saying GDP is down so much even in this economic climate.”
“We are seeing an over-reaction to an overstressed situation,” he added.
The consensus was that the fourth quarter would be hard, however.
New capacities due on stream in Europe and the Middle East were expected to affect
PE suppliers in
($1 = €0.68)
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