19 December 2011 15:15 [Source: ICIS news]
LONDON (ICIS)--European metallocene linear low density polyethylene (MLLDPE) prices have slipped by a further €10/tonne ($13/tonne) in December as aggressive selling continues to put pressure on values, sources confirmed on Monday.
The latest movement follows the earlier reduction of €20/tonne, leaving the total decrease for December at €30/tonne, double the €15/tonne fall in upstream ethylene prices.
Producers were forced to offer lower prices in order to shift stocks ahead of the year-end, particularly given the wide disparity between contract and spot prices.
Both local and Asian producers 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, the recent weakness in euro values against the US dollar has abruptly narrowed the European import arbitrage, which could provide some support to sellers that are now looking to raise prices.
Indeed, several sources said that the offtake of Asian material has been at low levels for some weeks as – in addition to concerns regarding quality – long lead times so close to the year-end have also deterred buyers from taking material.
As such, at least one producer remains optimistic that MLLDPE prices will see some recovery before the year is out.
“We’re winding down ahead of the year-end and our stocks of metallocene are at low levels,” the producer said. “People are approaching us for additional volumes. First it was traders and now it's buyers, but we cannot oblige.”
While buyers are in agreement that prices are likely to rise in January, there was no evidence to suggest that hikes would be possible before the year-end.
One consumer said: “Metallocene will probably go up in January, and probably much faster than LLDPE [linear low density polyethylene], but there’s no interest to buy so close to the year-end now and we do not expect a big increase before March.”
This was echoed by other buyers, which felt that large increases would prove difficult right across the wider polyethylene (PE) chain.
($1 = €0.77)
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