Europe PE, PP prices down in line with upstream contracts

22 April 2013 16:19  [Source: ICIS news]

By Linda Naylor

LONDON (ICIS)--April polyethylene (PE) and polypropylene (PP) prices are settling down, largely in line with the €50-60/tonne ($66-79/tonne) reduction in the April monomer contracts, sources said on Monday.

Low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) prices are often slow to settle and many will not be done before the end of the month but most sources agree that a €60/tonne reduction reflects mainstream business for these grades.

PP sellers were able to retain some of the €50/tonne drop in the propylene monomer contract at the beginning of the month, but as April progressed, a €50/tonne drop in polymer monthly business became more prevalent. 

High density polyethylene (HDPE) has been more subject to new capacity in the Middle East and some HDPE grades have lost around €80/tonne in April.

PE and PP demand has been below average in Europe for several months and many sellers adjusted their sales forecasts down this month. Production has also been reduced, in line with weak demand.

On the whole PP volumes have held up better than for PE.

“We have no spot availability,” said one producer. “We have almost reached our sales target for the month. It was lower than usual but we are almost there.”

Some PE buyers said they had been offered extra volumes at a further discount to the €60/tonne drop already given.

“We were offered another €50/tonne reduction to take more volume but we won’t take that,” said one.

Most buyers are still destocking and taking minimal volumes for April as they expect another price drop in May. On Friday 19 April some players were talking about a possible decrease of €100/tonne for the May ethylene contract, which converters expect to be transferred directly to PE pricing in May.

Expectations for a drop in the propylene contract were more modest.

On Monday, naphtha prices had rallied back above $800/tonne CIF (cost insurance freight) NWE (northwest Europe), however, and Brent crude oil bounced back over the $100/bbl barrier.

Expectations of a drop in the new ethylene and propylene contract price stem from the recent fall in crude oil and naphtha prices.

In mid-February naphtha was trading above $1,000/tonne CIF NWE but fell to a low of $792/tonne last week. On Monday naphtha was trading back up to $803-806/tonne.

Most producers, but also converters, will be keeping a close eye on naphtha movements following its sharp drop and almost immediate rebound in June and July 2012 that left the polyolefins markets in disarray.

Some players expect May pricing to reach the bottom of the current cycle, and for June and July to rebound.

“I can see no factor that will help bring prices up,” said a PE trader, however.

Most sources agree that demand will have to improve for any significant upward price movement to take place.

Spot PE and PP sales have been thin in the second half of April and levels offered are considered to be in line with May expectations.

LDPE net prices have slipped below €1,200/tonne FD (free delivered) NWE, below the ethylene contract price of €1,265/tonne FD NWE. In mid-March they were trading at €1,300-1,350/tonne FD NWE. Most other PE commodity price ideas are hovering around €1,200/tonne FD NWE with bids often below but business is not brisk.

PP spot prices have not slipped as much as PE and while homopolymer injection prices were confirmed below €1,200/tonne FW NWE, they had fallen from a more modest height in mid-March, of €1,230-1,260/tonne FD NWE.

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

($1 = €0.76)


By: Linda Naylor
+44 20 8652 3214



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