Europe MLLDPE prices slide on slow demand, oversupply

31 October 2011 15:58  [Source: ICIS news]

SINGAPORE (ICIS)--Metallocene linear low density polyethylene (MLLDPE) prices are coming under increased pressure in Europe as extremely slow demand and a growing oversupply of material weigh heavily on buyer sentiment, sources said on Monday.

Monthly domestic prices registered decreases of €10/tonne ($14/tonne) in October, as upstream ethylene rolled over. Suppliers were able to stave off larger reductions with arguments of poor margin.

The movement left MLLDPE prices at €1,440-1,510/tonne FD (free delivered) NWE (northwest Europe), according to ICIS, which are subject to various discounts and rebates.

However, pressure on the more supply-sensitive spot market is clear, as suppliers jostled to secure market share, cutting prices to €1,220-1,300/tonne FD NWE, while material of South Korean origin is available at €1,180/tonne FD NWE.

Despite this, not all MLLDPE buyers are keen to purchase Asian material. It is not clear whether this product is on the water, and most will not agree to sales that will only arrive in Europe in six weeks’ time, as pressure on commodity LLDPE grades is expected to continue weighing heavily on MLLDPE prices.

“Producers can argue what they like about margins and upstream movements,” one MLLDPE buyer explained, “but if the price of LLDPE continues to go down because of oversupply, it will take metallocene with it. We expect more reductions in the next month.”

There were some deals for Asian volumes, however, with one film converter saying it had booked shipments the more competitively priced material as far in advance as December.  

In the wider LLDPE market, producers are also slashing offers of comparable grade octene LLDPE (C8) to €1,260-1,330/tonne FD NWE on a net basis. However, numerous film converters said it remains preferable to purchase LLDPE because of special ‘one-off’ deals that are currently available in the market.

A film converter explained: “It still makes sense to buy metallocene at the moment, and the market is changing. New production is coming on stream in Asia and more material is pushing into the European market because [local] sellers have lost an export market to an extent.”

Sellers, however, maintain the that specialist nature of the MLLDPE market will provide some support to prices, arguing that poor margins across the wider PE chain do not allow for further reductions.

($1 = €0.71)

For more on MLLDPE, visit ICIS chemical intelligence

By: Stephanie Wilson
+44 20 8652 3214

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