17 June 2011 12:40 [Source: ICIS news]
LONDON (ICIS)--European polyolefin spot prices continued to fall this week, by €20-60/tonne ($28-85/tonne), as the steady flow of competitively priced material from both local and import suppliers continued to weigh on values, market sources said on Friday.
Trading activity is extremely slow as expectations of lower prices in the coming weeks, coupled with numerous public holidays over June, pushed buyers to the sidelines of the market.
Many sellers responded to this limited buying interest by slashing their offers in a bid to move high-priced inventories before prices fell further.
This was most apparent in the low density polyethylene (LDPE) market, where spot values have fallen by €180-200/tonne since the beginning of May, leaving prices at €1,250-1,300/tonne FD (free delivered) NWE (northwest Europe), according to data from ICIS.
While the downward trend appears to have lost some momentum in the PE market – as values reach what is widely considered to be the bottom of their pricing cycle – polypropylene (PP) still has some way to fall, according to market sources, with homopolymer raffia PP registering large losses of €50-60/tonne this week to leave spot prices at €1,250-1,280/tonne FD NWE.
“The market is still falling and demand is lousy,” noted one PE/PP trader. “We are not at the bottom yet and everyday prices get more competitive. You have to drop offers if you want to move material, but it seems to me that no one knows where to even start offering from anymore. These prices are crazy.”
However, buyers are still reluctant to take material even at such dramatically reduced prices.
A large PP consumer said: “I am not buying a lot, just one or two trucks at a time. I kept a high stock level when prices were going up, so now I am using that up. Why would I buy now when I know prices will be lower in July?”
This is a view shared by many PP/PE buyers and sellers alike. Numerous sources believe that prices will remain under pressure while the Chinese market remains slow, while upstream ethylene and propylene prices are expected to decrease again in July given the lengthening availability in the market.
One seller outlined: “PE/PP margins are still healthy, and cracker margins are extremely good so we cannot expect too much of a reduction in rates in the short term. The market will be oversupplied for a while yet.”
($1 = €0.71)
For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.
Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.
|ICIS news FREE TRIAL|
|Get access to breaking chemical news as it happens.|
|ICIS Global Petrochemical Index (IPEX)|
|ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index|
Asian Chemical Connections