15 September 2011 11:40 [Source: ICIS news]
LONDON (ICIS)--Polyethylene (PE) producers in ?xml:namespace>
“The outlook for the months to come is not rosy,” said one major producer, who also hinted that production cutbacks would have to be implemented if the European market was not to become oversupplied.
The level of demand most concerns producers this month. September started very slowly and continues to be cautious, but volumes are picking up for some.
“People are buying, but on a short-term, hand-to-mouth weekly basis,” said the producer. “By Tuesday the orders have started to come in, so demand isn’t looking as bad as it did.”
A trader agreed.
“I sold quite well on Monday and Tuesday, and some people are now buying for October,” the trader said.
August buying was strong, and several PE buyers built up their inventory levels. In June PE producers had been predicting an upturn in ethylene prices, prompting buyers to buy more than they needed in July and August.
While buyers report the odd spot deal at lower prices, particularly in the film sector, they did not report settling any monthly business at lower levels.
“I’ve got some low-priced imports, but that’s just for testing at the moment,” said a large buyer. “There’s still some way to go before the end of the month, but for the moment I can’t see the Europeans doing much.”
In late August some producers had announced increases for PE, but low-priced spot offers from western European sources, particularly in the low density polyethylene (LDPE) market, have quickly put paid to producers’ aims of achieving higher prices.
Producers are now considering and implementing production cutbacks, as some PE grades begin to be oversupplied.
Some exports are done to maintain some balance in
“We are realistic,” said another producer. “Demand is slow and there is plenty of supply. If market dynamics don’t support increases, there is little we can do.”
Producers continue to complain of the lack of profitability, and an unsustainable situation, leading to expectations of widespread cutbacks in the fourth quarter.
Many PE prices will not settle before the end of the month, on a retroactive basis.
LDPE net prices are reported around €1,150/tonne ($1,575/tonne) FD (free delivered) NWE (northwest
($1 = €0.73)
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