Europe HDPE pipe prices fall in second half of May on feedstocks

24 May 2012 23:59  [Source: ICIS news]

LONDON (ICIS)--European high density polyethylene (HDPE) pipe resin prices have decreased by €20/tonne ($25/tonne) in the second half of May, on top of the €40/tonne decrease recorded earlier in the month, producers and converters said on Thursday.

The bearish sentiment on the polyethylene (PE) pipe market is the result of ongoing crude oil and naphtha price falls, amid heightened concerns over the European economy. Price decreases are also supported by healthy inventory levels among producers.

ICIS initially published a decrease of €40/tonne for PE pipes on 10 May to reflect the then-lower bids, offers and deals in the market.

Prices are now assessed at €1,535–1,550/tonne FD NWE for PE 100 and PE 80 pipe grades, bringing the total May price decrease for both grades to €60/tonne.

Final price decreases for the month were said to have reached up to €70/tonne at one point, and some buyers still maintain that a €70/tonne drop has been achieved for a few deals.

Producers largely maintain May price reductions are at €40–60/tonne, however.

Although April-May is the beginning of the peak season in finished PE pipes, trade has slowed in the second half of May as expectations grew of an even bigger price fall in June.

Converters continue to see mixed downstream demand in the northwest European market.

Demand from the downstream utilities sector – where PE pipe is used for water pipe applications – is relatively healthy, although demand varies from country to country.

Demand from the construction sector is poor. Business is healthy for some converters, but others are suffering with the poor macroeconomic conditions in Europe.

Meanwhile, June price decreases are on the cards, both producers and converters said. The feedstock ethylene contract price for June is expected to fall because of ongoing weakness in upstream crude and naphtha prices.

Sentiment in the PE pipe market first turned bearish after the May feedstock ethylene contract price settled at €1,325/tonne FD NWE, down by €20/tonne from April. The decrease in May is the first in the PE pipe market this year.

April’s PE 100 and 80 pipe grade prices were the highest on record since ICIS started tracking the specialty grade in late 2009. Prices increased by 24% and 25% respectively on average in the first quarter of 2012, and by €30–40/tonne in April.

($1 = €0.80)

By: Cuckoo James
+44 (0) 208 652 3214

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