10 April 2013 11:35 [Source: ICIS news]
By Linda Naylor
LONDON (ICIS)--Turkish polyolefin producer Petkim dropped most of its polyethylene prices this week as market weakness continues, sources said on Wednesday.
Lower naphtha prices and a faltering Asian situation have stopped the flurry of activity that looked set to begin last week in its tracks.
“If I were a buyer I would do the same,” said a trader who complained that offers were being met with much lower bids, usually at unworkable levels.
Iranian offers are also more abundant as Asian buyers remain hesitant.
“They [Iranian producers] can’t sell as much into Asia so they want to sell more into Turkey,” said the trader.
Low density polyethylene (LDPE) prices have fallen sharply in recent weeks, from $1,570-1,580/tonne (€1,193-1,201/tonne) CFR (cost and freight) in early March to $1,480/tonne CFR for product subject to a 6.5% import duty.
Offers of Iranian LDPE have been too high to work of late as new duties imposed from 1 January left Iranian LDPE with an import duty of 13.5%. Most other LDPE importers are subject to a 6.5% duty, with European PE free from duty.
LDPE from some sources in the Middle East has been offered recently below $1,500/tonne CFR, but for Iranian LDPE to be interesting to potential buyers a hefty discount would have to be applied to compensate for the higher import duties.
Some sources say even levels of $1,440/tonne CFR would be too high to work and are pushing for lower levels. A Chinese trader was heard selling Iranian LDPE in Asia this week at $1,350/tonne CFR but these levels are not present in Turkey.
High density polyethylene (HDPE) prices are also under downward pressure, and offers of both LDPE and HDPE from Europe are adding to the already cautious sentiment.
PE exports from a limited number of sellers in Europe had been limited to LDPE but this week some HDPE grades were also offered out of Antwerp.
Petkim lowered its PE Prices by $15-25/tonne, with the exception of HDPE film, which remained stable.
On Wednesday morning naphtha was trading at $857-859/tonne CIF (cost, insurance and freight) NWE (northwest Europe), down from a level above $1,000/tonne CIF NWE in mid-February.
The weakness in the upstream naphtha market is having a dampening effect on demand globally.
PE is used widely in the packaging and household goods sectors and also in the agricultural industry.
($1 = €0.76)
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