01 June 2012 11:07 [Source: ICIS news]
LONDON (ICIS)--Polyethylene (PE) spot prices are falling fast as some sellers rush to grab business in what is looking like another low-demand month, sources said on Friday.
“Stretch film demand in particular is very weak,” said one producer.
Spot prices have had to be very low to tempt buyers, and levels barely above €1,100/tonne ($1,358/tonne) FD (free delivered) NWE (northwest Europe) have been seen for western European low density polyethylene (LDPE).
A “normal” offer was considered to be above this and some sellers said they could still achieve prices above €1,200/tonne FD NWE. Buying remains very thin, however.
LDPE spot prices were in the mid-€1,300s/tonne FD NWE in late April, when naphtha prices averaged above $1,000/tonne CIF (cost insurance freight) NWE.
On Friday morning, naphtha was trading at $762-770/tonne CIF NWE, and Brent crude oil dipped just below $100/bbl.
“We buy only what we need and are keeping our stocks low,” said a large PE buyer.
Lower upstream prices are having an impact on demand again for June, as the recent fall in naphtha could mean another drop in the next ethylene monomer contract, in spite of the fact that June has only just begun.
Producers’ stocks have risen in recent weeks following low demand in April and May. The €120/tonne reduction in the June ethylene contract has been transferred directly to PE monthly prices, and sellers had hoped that this would prompt increased buying in Europe.
“They will only buy if the price is low enough,” said a producer.
Exports to Turkey from Europe for some high density polyethylene (HDPE) grades were at very keen prices, but this was not confirmed from the sell side.
“I wish they would just bring the prices down to the bottom then we can get on with our business,” said a buyer, who could be getting his wish if some sources are to be believed.
PE is used widely in the packaging and agricultural sectors, and also in the manufacture of household goods.
($1 = €0.81)
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