EU HDPE pipe falls €20/tonne in August, more reductions expected

05 August 2010 19:40  [Source: ICIS news]

LONDON (ICIS)--European high density polyethylene (HDPE) pipe grade August domestic prices lost €20/tonne ($26/tonne) as a result of upstream ethylene reductions and building inventories, market players said on Thursday.

The movement left certified black HDPE 100 and 80 prices at €1,200-1,260/tonne and €1,220-1,270/tonne FD NWE (free delivered, northwest Europe) respectively, according to ICIS.

There was some expectation among market players that further reductions could be on the horizon, as availability was improving, causing some European producers to behave aggressively, sources said.

One producer was reported to be offering decreases of €30-40/tonne in the Polish and Romanian market in what market players speculated was a bid to secure market share.

A second seller also conceded that it might face further pressure to reduce prices as inventories were building.

“Manufacturers have not pulled back their operating rates because of the sky high cracker margins in Europe,” noted the source, before adding: “Converters can see that producers can afford to pass on more than the ethylene reduction, and the availability of product is increasing.”

This was echoed by a large pipe converter, who said: “There is no difficulty to get product at the moment and we expect that we might be able to push for more than the initial reductions of €20/tonne that we have been offered, although €40/tonne may prove difficult.”

While there was some optimism among producers that the recent rally in prices in the wider Chinese PE market would eventually filter down in the European market, others questioned the sustainability of the apparent revival in demand.

A major distributor outlined: “The higher crude is driving the Chinese buying interest; there has been no change to the actual fundamentals in the market. Even if the trend proves to be a long term one, there will be no effect [on Europe] for a few months.”

($1 = €0.76)

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By: Stephanie Wilson
+44 20 8652 3214

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