Europe spot PE prices increase in May despite feedstock fall

14 May 2013 12:46  [Source: ICIS news]

LONDON (ICIS)--Spot polyethylene (PE) prices are on the rise in May, even as monthly prices are decreasing on a lower ethylene contract, but many sources question the validity of the current upward momentum, sources said on Tuesday.

“I can sell LDPE [low density polyethylene] at €1,200/tonne ($1,558/tonne) now,” said a trader who was selling LDPE in the mid-€1,100s/tonne FD at the beginning of the month.

LDPE and C4 (butene based) linear low density polyethylene (LLDPE) grades in particular have tightened in May, mainly because production has been cut back substantially on low demand and some buyers have returned to the market to buy in case prices are higher in May.

Some producers have stopped selling for May and hint at higher prices for June.

“I am not buying any more in May,” said a large buyer. “If it goes up, it won’t be more than €20-30/tonne. The fundamentals just aren’t there.”

Monthly PE prices have dropped by €70-100/tonne from April following the €100/tonne drop in the May ethylene contract price.

Rising naphtha prices have stemmed any further decrease but many buyers do not intend to build stock as the long-term direction of naphtha is not clear.

PE demand has been weak in 2013 and many sources expect no change in poor economic fundamentals.

LDPE and LLDPE are used widely in the packaging and agricultural sectors.

($1 = €0.77)

By: Linda Naylor
+44 20 8652 3214

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