28 March 2013 11:50 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS)--Polyethylene (PE) and polypropylene (PP) spot prices in Europe slipped this week, on expectations of lower monomer contracts and their subsequent settlement at a decrease of €50-60/tonne ($64-77/tonne), sources said on Thursday.
Producers intend to allow monthly prices ease gently, the sources added.
The April ethylene monomer contract fell by €60/tonne, to settle at €1,265/tonnne FD (free delivered) NWE (northwest Europe), and the propylene contract settled down by €50/tonne, to €1,105/tonne FD NWE.
“We will give away €20-30/tonne in April,” said one producer, “but we didn’t get the whole increase of the March ethylene contract so we won’t give away the whole of the April decrease.”
Others voiced similar opinions. PE sector buyers also agreed in some cases, as margins are particularly weak in that market.
"Demand is so weak that we expect to get the full €60/tonne [decrease]," said one buyer however.
PE prices were flat to €20/tonne higher in March, while the ethylene contract rose by €50/tonne. PP prices increased by around €25/tonne while the propylene contract rose by €55/tonne.
Spot prices have been eroded throughout this week. Spot low density polyethylene (LDPE) prices had been trading in a range of €1,300-1,340/tonne FD NWE earlier in March but this week prices slipped to €1,280-1,310/tonne FD NWE.
Similarly, PP homopolymer injection spot prices had been trading in the mid-€1,200s/tonne FD NWE until this week when levels fell back to €1,210-1,230/tonne FD NWE.
Demand for polyolefins has been poor in 2013, with PP volumes faring better than PE, and some sources hope that lower prices will bring buyers back to the market. Others fear that the current low demand is down to the weak economic situation in Europe that is having a global impact.
“I estimate PP volumes to be down by around 6% on the same quarter last year,” said one observer who estimated PE to be doing slightly worse.
Sources did not expect a huge fall in pricing levels in April, but most expect some erosion in monthly pricing, and this was confirmed as producers digested the news of lower monomer contract prices.
Monomer contracts fell on lower naphtha prices and weaker downstream demand.
Sources expect production to be kept under control to accommodate poor volumes.
Imports are not workable for most grades at present, even though re-exports from bonded warehouses in China are heard offered again into Europe.
“Another $50/tonne lower, and I will buy,” said one trader, “but for the time being the numbers offered just won’t work.”
PE and PP are used widely in the packaging and household goods sectors. PE is also used in the agricultural industry and PP in the automotive sector.
($1 = €0.78)
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