Europe PE spot prices up but activity still low

06 March 2013 11:32  [Source: ICIS news]

LONDON (ICIS)--Polyethylene (PE) spot prices in Europe are slightly up as buyers come back to the market for March deliveries, but activity remains low, sources said on Wednesday.

“Things are still more or less the same as they were at the end of February,” said one reseller. “We can get €20-30/tonne ($26-39/tonne) more at low-end accounts, but the market is pretty flat.”

Low density polyethylene (LDPE) prices had dipped below €1,300/tonne FD (free delivered) NWE (northwest Europe) at the end of last month, and levels were now around €1,320/tonne FD NWE. Increases are still a way from the €50-100/tonne targeted by producers for monthly volumes.

Retroactive settlements in the PE sector mean that monthly business is still hard to gauge, but many sources expect to be able to buy at an increase below those sought by sellers.

“It’s going to be another month where buyers who buy later buy better,” said the reseller.

“Things are quiet,” said a PE buyer. “If they get €30/tonne [increase] they’ll be lucky.”

Increases for March PE are based on a €50/tonne increase in the March ethylene contract price, but naphtha, a principal driver in the European PE market, has begun to ease in price in recent days. On Wednesday morning it was trading at $926-928/tonne CIF (cost insurance freight) NWE. Mid-February naphtha levels had climbed above $1,000/tonne CIF NWE.

Inventories in the PE sector are thought to be low along the chain, and both buyers and sellers are cautious.

One producer said that if they could not improve margins in March, they would simply cut back further, as there was little point buying expensive ethylene to produce PE at a loss.

PE is used widely in the manufacturing of packaging and household goods, and also in the agricultural sector.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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