FocusEurope PE spot demand weak, monthly volumes steady to lower

15 March 2013 12:09  [Source: ICIS news]

Europe PE spot demand weakLONDON (ICIS)--Demand for spot polyethylene (PE) in Europe is weak, and producers are struggling to lift prices following the €50/tonne ($65/tonne) increase in the March ethylene contract price as many sources now expect an upstream decrease for April, sources said on Friday.

“We are no longer targeting a €50/tonne increase,” said one supplier.

“For so long nobody has been buying anything anywhere,” said a trader.

Producers had started the month targeting hikes in line with the €50/tonne rise in the ethylene contract price but those goals soon softened as it became clear that demand would not support such levels.

Spot prices rose by some euros at the beginning of the month but offers are back to end-February levels in mid-March and trading activity is very limited.

Traders, however, are not able to buy new volumes at workable price levels and find themselves chasing meagre sales.

“There’s no cheap material on the sourcing side. We’re trying hard to move quantities but it’s a hard game right now,” said another trader.

Producers’ spot offers are also limited as most have adjusted production to control inventories in today’s lacklustre market.

Now that naphtha prices have begun to trend down there are expectations of a lower ethylene contract in April, in spite of a heavy slate of scheduled shutdowns at the cracker level. Expectations of a decrease in the April ethylene monomer contract price have begun to have a dampening effect of demand and price expectations.

“I am running down my stock,” said a large PE buyer. “It’ll [PE pricing] go down in April. If you settled early this month you’ll regret it.”

“It is more difficult to pass increases through now compared to the beginning of the month,” agreed a supplier.

Contractual volumes move along as normal, as long as the price is right, admitted a couple of producers.

“We are hitting our sales forecast for the month but are not able to lift prices beyond €20/tonne,” said one.

“I am happy with the demand,” said another, “it’s just the prices they want to pay I am not happy with!”

One major supplier said business was up by as much as €40/tonne for March, but the starting point was not clear.

Net low density polyethylene (LDPE) prices are trading at €1,300-1,350/tonne FD (free delivered) NWE (northwest Europe).

PE is used widely in the packaging, household goods and agricultural sectors.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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