Weak Europe PE market awaits new ethylene price

11 December 2008 17:15  [Source: ICIS news]

LONDON (ICIS news)--Polyethylene (PE) prices are weak in Europe, in spite of an upturn in demand in December, sources said on Thursday.

December saw a slight increase in volumes after a very poor November, which saw low density polyethylene (LDPE) prices fall by €400/tonne ($519/tonne).

LDPE spot prices were trading at €600/tonne FD NWE in December, and production was widely cut back.

“We are seeing some comeback of demand – nothing spectacular. The crisis is not over, but there are now some hints of normality creeping back into the market,” said one PE producer.

Sources said there was a feeling that prices had reached the bottom of the current cycle.

While a drop in first-quarter ethylene might add some downward pressure to the PE market in January, sources felt that most of any price decrease based on a new ethylene price had already been anticipated in the fourth quarter.

There was some talk of lower offers in January, but few expected a significant price fall next month.

One major producer was even considering a price hike.

“Stocks along the chain are depleted. December demand has been better than we expected and we feel there could be the possibility to increase prices in January,” a company source said.

“Our profitability has been wiped out,” he said.

Not all producers were convinced that the price trend could change next month.

“The market is settling, that’s true,” said another producer. “But from that to say that prices will go up is altogether another matter.”

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

($1 = €0.77)

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By: Linda Naylor
+44 20 8652 3214

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