29 June 2012 14:22 [Source: ICIS news]
LONDON (ICIS)--European low density polyethylene (LDPE) spot prices have fallen to levels below €1,000/tonne ($1,250/tonne) FD (free delivered) NWE (northwest Europe) for the first time since January 2010, sources said on Friday.
“The lowest prices in the market are coming from producers,” said a trader. “They are offering these prices even to buyers that buy one or two trucks a month. They are not even leaving us the crumbs.”
A major producer confirmed that some LDPE spot deals were trading at €970/tonne FD NWE, and some sources also said that they saw deals done at €950/tonne FD NWE.
These prices were last seen in Europe in January 2010. Since then, prices have undergone a roller coaster ride, with January 2012 at €1,080/tonne FD NWE, moving up to a minimum of €1,400/tonne FD NWE in April, to fall steadily since.
The current price drop is down to the recent slump in naphtha pricing that culminated in a €170/tonne fall in the July ethylene monomer contract, which settled on Thursday 28 June at €1,035/tonne FD NWE.
Naphtha pricing rallied to $729-737/tonne CIF (cost insurance freight) NWE on Friday morning, but in April the average naphtha price was above $1,000/tonne CIF NWE. Naphtha prices fell below $700/tonne CIF NWE during the week beginning 18 June.
June monthly pricing has still not been fully settled in many cases. Extra discounts are being sought and, in some cases, applied compared with pricing settled earlier in the month.
Demand in June has been better than in April and May and many sources now think that July will see a jump in volumes.
Converters’ stocks are generally very low, while producers’ stocks are mixed, but widely considered to be ample.
For July monthly pricing, where levels are much higher than spot prices, most producers are looking at margins before coming up with definite pricing offers. Several assert that they will not relinquish the full €170/tonne drop of the monomer contract to PE buyers, as polymer margins are weak, but there are also signs that the full €170/tonne drop may be offered to buyers for July.
PE is used widely in packaging and agricultural applications.
($1 = €0.80)
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