Polimeri Europa cuts back PE output due to weak demand

16 September 2011 14:55  [Source: ICIS news]

LONDON (ICIS)--Italy’s Polimeri Europa is implementing a programme of polyethylene (PE) production cutbacks in a move to balance the current PE situation in Europe, a company source said on Friday.

PE demand in September has been disappointing for sellers, and while some had suspected that low volumes were the result of a tactical stance from buyers aiming for lower prices, it is now widely thought that weaker-than-expected demand is because of short order books at the converter level.

Other European producers are considering, or already implementing, production cutbacks.

“We are assessing our options at present,” said another PE producer. “Plants will need to run at reduced rates to get the market back into balance.”

PE buyers in August built some stock, enabling them to buy less in September.

“We have order books of two weeks,” said a PE buyer, who added that a four-week book would be nearer the norm.

In the PE market there is a high level of concern about the European economy, and buying is being kept to a minimum, on a needs-only basis.

The low density polyethylene (LDPE) sector is particularly nervous, and low spot offers are heard below €1,100/tonne ($1,528/tonne) FD (free delivered) NWE (northwest Europe) in some cases, down from €1,140/tonne FD NWE in mid-August. Monthly prices are significantly higher, but will not be fully settled until the end of September.

PE is sued widely in the manufacture of films for packaging and agricultural sectors, and in the manufacture of household goods.

Polimeri Europa produces PE at several sites in Italy, France and Germany.

($1 = €0.72)

For more on PE visit ICIS chemical intelligence

By: Linda Naylor
+44 20 8652 3214

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