European LDPE spot prices start to slide on supply and offers

06 May 2011 13:14  [Source: ICIS news]

LONDON (ICIS)--European low density polyethylene (LDPE) spot prices are indicating €10/tonne ($14/tonne) reductions at the low end of the range, as lengthening supply and aggressive offers weigh on buyer sentiment, market players confirmed on Friday.

As a result, the LDPE spot range has widened to €1,430–1,500/tonne FD (free delivered) NWE (northwest Europe) according to data from ICIS, although offers above €1,500/tonne have been heard in certain regions.

The pressure appears to be concentrated in the UK market, where a weak pound sterling and improved regional supply have reportedly brought local net spot prices down to £1,210–1,270/tonne ($1,971–2,068/tonne, €1,360–1,427/tonne) FD UK, resulting in reductions of up to £50/tonne on May contract prices.

Plummeting crude futures, a weak US dollar and the threat of imports on both linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) are also exerting pressure across the wider polyethylene (PE) market, as margins continue to improve.

While a number of European PE producers are adamant they will be able to recoup the upstream May ethylene (C2) rise of €25/tonne, there is some expectation that slowing sentiment in the PE spot market will weigh on contract negotiations.

“We have already been forced to drop our UK [May contract] prices by £50/tonne, and have managed to limit the losses in northwest Europe to €25/tonne,” one large producer said.

“The market is weak and buyers are nervous. The cracker margins are good and there is plenty of availability, from the Nordics to southern Spain. It is becoming a buyers’ market,” the producer added. 

This sentiment is echoed by many traders.

One said: “Suddenly there is much more availability in the market. Although producers might not be under so much pressure to sell, resellers are pushing volumes and cutting their losses. Buyers sense it, and so they wait.

“We offer reductions of €30–50/tonne to consumers, and they still want to wait for another few days before they buy,” the trader added. 

($1 = €0.69)

(€1 =£0.89)

For more on low density polyethylene, visit ICIS chemical intelligence

By: Stephanie Wilson
+44 20 8652 3214

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