23 June 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European June polyethylene (PE) pipe-grade resin contract prices have largely ended the month with reductions of €50/tonne ($71/tonne) as a result of extremely low demand, market players said on Thursday.
Values then lost an additional €20/tonne on the low end of business in the following weeks, as one or two producers dropped their offers further in a bid to tempt buyers back into the market.
With the majority of business now concluded, the total reduction for June stands at €50/tonne, greater than producers’ initial targets of minus €20–45/tonne. This left black HDPE 100 and 80 values at €1,390–1,425/tonne and €1,400–1,440/tonne FD (free delivered) NWE (northwest Europe) respectively, according to data from ICIS.
“It's been an extremely difficult month, with limited quantities sold,” a major producer noted. “There is just too much availability in the market and some really competitive selling, with outsiders ruining the market.”
This was echoed by a reseller, who said: “I have not sold a single kilo of PE pipe this month. My supplier is dealing with the buyers direct and I do not want to go near the stuff.”
The majority of buyers canvassed agreed that prices had slipped by some €50/tonne on average, although settlements of minus €60–80/tonne were heard in certain regions, with larger reductions particularly apparent in Poland and the Mediterranean, where construction activity remains subdued.
A consumer outlined: “There were one or two producers looking for cash and market share and they offered big reductions as soon as the month began. This just put more pressure on the market.”
Looking ahead, there is already a clear downward trend in the European ethylene market and many players speculated that despite low profitability in the HDPE pipe industry, further reductions were likely in July.
A producer said: “Of course, the intention is to hold on to margin where we can, but we will have to pass the ethylene reduction through at least. More than that might be difficult because the whole industry is unprofitable.”
($1 = €0.70)
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