FocusEurope PE plummets on imports surge

02 October 2008 13:09  [Source: ICIS news]

By Linda Naylor

Europe buyers offered cheaper PE materialLONDON (ICIS news)--Polyethylene (PE) prices into Europe are falling sharply as sellers seek to find buyers for material in a lacklustre market and imported volumes become more freely available, sources said on Thursday.

September low density PE (LDPE) fell €80-100/tonne, leaving gross prices at €1,480/tonne FD (free delivered) NWE (northwest Europe) at the end of the month.

Early indications for October LDPE business were already at €1,400-1,420/tonne FD NWE on a gross basis, and spot net levels were still under pressure.

PE price erosion began in September, even before the settlement of fourth-quarter ethylene at a reduction of €108/tonne ($150/tonne). August PE demand was the lowest on record, and producers’ inventories had built up in spite of improved volumes in September.

“We are facing competition in Poland at €1,180/tonne FD NWE from one central European producer,” said a trader. “We can’t compete with this.”

This was barely above the fourth-quarter ethylene level of €1,120/tonne FD NWE.

Spot LDPE levels in western Europe were more widely considered to be higher, above €1,200/tonne FD NWE, on a net basis.

Imported volumes were on offer on a more widespread basis, as PE demand slumped globally and export opportunties were limited, market players said.

Vessels of PE were said to be arriving in Europe from the Middle East. Current volumes were said to be limited to five to six thousand tonnes, according to one trader, but with the prospect of higher volumes by the end of October.

One major PE producer admitted that October PE prices were affected by imports, saying: “The tsunami has started.”

High density PE (HDPE) was not exempt from downward pressure, with much of the imported material thought to be HDPE.

There were several new capacities due on stream in the Middle East, some of which had suffered delays.

Arya Sasol Polymer Co expected to start on-spec production at its much-delayed HDPE/medium density PE (MDPE) swing plant at Assaluyeh in Iran by the end of October, with LDPE expected by the end of November, said a source close to the company.

Arya Sasol began trial production at the two plants, which each have a nameplate capacity of 300,000 tonnes/year, in early April. The start-up of the units, originally scheduled for the second half of 2007, was deferred several times due to a shortage of technical personnel.

Saudi Ethylene & Polyethylene Co (SEPC) expected to begin commercial production at its 1m tonne/year cracker and 400,000 tonne/year HDPE plant in Al-Jubail, Saudi Arabia, by mid-October, said sources close to the project.

A 400,000 tonne/year low density PE (LDPE) plant at the same complex will start-up by mid-November.

SABIC also had a 400,000 tonne/year LDPE unit planned for the first quarter of 2009 at Wilton in the UK.

Market sources said that Saudi Aramco/Sumitomo Chemical joint venture PetroRabigh planned to start up its 900,000 tonne/year PE plant at Rabigh, Saudi Arabia, in the first quarter of 2009, but this could not be confirmed by the company.

The facility will include LDPE, LLDPE and HDPE lines.

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

($1 = €0.71)

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By: Linda Naylor
+44 20 8652 3214

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