FocusEurope spot PE prices slip on prospect of lower Apr ethylene

20 March 2013 12:27  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS)--Polyethylene (PE) spot prices in Europe are slipping on growing expectations of a lower ethylene contract in April, although producers are still working to increase monthly prices in March, market sources said on Wednesday.

“I have sold PE this morning at €1,290/tonne ($1,654/tonne) [FD (free delivered) NWE (northwest Europe)] and business is not too bad,” said one trader.

Spot low density polyethylene (LDPE) prices have dipped below €1,300/tonne FD NWE again after trading in the mid-€1,300/s tonne FD NWE in February as some players expected better March demand to lift general pricing levels.

The €50/tonne increase in the March ethylene contract price has proved difficult for producers to recover. While several are still pushing hard to recover a portion of the monomer hike, they are finding it tough.

“A rollover seems possible even if some [producers] are still asking to recover at least a small part of the C2 increase, around €20/tonne,” said one buyer.

“My suppliers have rescinded their request for an increase this week,” said another.

“We are still officially looking for a €60/tonne increase for March PE,” said a producer, admitting that most hikes were running at a maximum of €20-30/tonne and it was becoming increasingly difficulty to settle higher in the second half of the month.

Spot sellers have had difficulty selling as naphtha prices have decreased, leading to expectations of a lower April ethylene contract, but some say they have seen brisker business this week, albeit at lower price levels.

“Spot prices are lower,” said the trader; “but we don’t expect prices to collapse in April. It is very hard to source product at workable prices to replace volumes.”

“We cannot match these prices [below €1,300/tonne FD NWE] so it looks as though producers are scooping up all the volumes,” said another trader.

Spot offers from producers have not been widespread in Europe in March, however, but lower naphtha prices may have helped with peripheral sales.

“We don’t have any spot volumes for sale,” said one producer, as production cutbacks and some unplanned production issues have limited output.

There were reports from Turkey of LDPE offered at €1,260-1,270/tonne CFR (cost and freight), but there was no confirmation of this from European producers.

The weakness of the European PE market stems from poor demand, a factor that has been present for at least six months, and expectations of lower prices to come as naphtha prices ease.

On Wednesday late morning, naphtha was trading at $912-914/tonne CIF (cost insurance freight) NWE, and was below $900/tonne CIF NWE on Tuesday. In mid-February, naphtha rose to above $1,000/tonne CIF NWE.

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

($1 = €0.78)

By: Linda Naylor
+44 20 8652 3214

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