Europe December MLLDPE falls €20/tonne after ethylene decrease

12 December 2011 11:29  [Source: ICIS news]

LONDON (ICIS)--European metallocene linear low density polyethylene (MLLDPE) prices have lost €20/tonne ($27/tonne), as the growing disparity between contract and spot prices weighed heavily on values, sources said on Monday. 

December domestic prices slipped to €1,360–1,400/tonne free delivered (FD) northwest Europe (NWE), according to data from ICIS. These prices are reported on a gross basis and are subject to discounts, depending largely on volume.

Producers had been optimistic that they would be able to stave off reductions in December in order to benefit from the €15/tonne decrease in upstream ethylene prices, citing the need to recoup some margin. 

However, this argument was not strong enough to convince buyers to accept a rollover, as the availability of material and the aggressive tactics of some sellers forced the majority of suppliers to give reductions beyond the ethylene movement.

Both local and Asian producers that are widely thought to be destocking ahead of the year-end are still concluding spot deals as low as €1,120–1,150/tonne FD NWE, according to many sources, although deals of up to €1,250/tonne FD NWE are still heard at smaller accounts. 

However, at least one producer remains optimistic that there will be some upward movement on prices before the end of the year, as it feels that these aggressive spot offers are now beginning to dry up.

“The market will shoot up once people realise there’s no more material available,” said the source. “Stock is in a better balance and buyers are coming back into the market. Our demand has been good given the time of the year, and prices in January will rise quickly.”

While numerous buyers agreed that the recent trimming of operating rates was tightening up stock availability, most are unconvinced that prices will register any increase before February.

One consumer said: “Prices will not go any lower, but the recovery will take some time because the whole LLDPE chain is under so much pressure. Demand will not be particularly good in January and February and we are not building any stock on the basis that PE prices might rise €30/tonne over the next two months. We will continue to buy what we need, as and when we need it.”

($1 = €0.75)

For more on MLLDPE visit ICIS chemical intelligence


By: Stephanie Wilson
+44 20 8652 3214



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