15 January 2009 16:07 [Source: ICIS news]
LONDON (ICIS news)--Low December spot offers for polyethylene (PE) have disappeared, leading to a modest upturn in January prices as buyers took advantage of producers’ offers, market sources said on Thursday.
Spot low density PE (LDPE) prices slumped to €580/tonne ($763/tonne) FD (free delivered) NWE (northwest ?xml:namespace>
This was down from €1,250/tonne FD NWE at the end of September, which was well below the €1,120/tonne FD NWE quarterly ethylene contract.
Weak spot PE prices led to the best month of the year for several PE sellers. Buyers’ stocks had been very low, with buying continuing into January.
“Volumes are reasonable,” said one PE producer. “People are replenishing empty stocks because they don’t expect prices to go down in the short term.”
The fact that ethylene was expected to be settled on a monthly basis for at least the first quarter, if not beyond, strengthened the belief that PE prices had stopped falling.
“If you buy now, you can’t make a mistake. We won’t come back to €600/tonne (FD NWE) in the short term,” said one large PE buyer.
“Naphtha has increased significantly in relation to oil and everybody expects February ethylene to be higher than January,” said the buyer.
The January ethylene contract had settled at €520/tonne FD NWE, down by a record €600/tonne from its fourth-quarter level.
Thursday’s naphtha price was at $369-379/tonne CIF (cost insurance freight), up by as much as $100/tonne since the January ethylene contract was settled.
In spite of the widespread belief that PE prices had reached the bottom for the time being, there was no expectation of a significant price increase when monthly negotiations began.
Producers had announced €50-80/tonne hikes for January PE but few buyers expected little more than €20/tonne, and this only at low-priced accounts.
“I’m not convinced there’ll be a rollover, but there won’t be a €50/tonne hike,” said another PE buyer.
January PE prices were still under discussion and not expected to settle fully before the last week of the month.
PE producers in
($1 = €0.76)
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