Lower Europe PE, PP spot prices as market awaits new contracts

27 September 2013 10:07  [Source: ICIS news]

LONDON (ICIS)--Lower polyethylene (PE) and polypropylene (PP) spot prices were heard throughout Europe as markets slowed awaiting the settlement of the new October ethylene and propylene contracts, but the picture was patchy and some prices remained stable, sources said on Friday.

Meanwhile, some retroactive deals were still being done at an increase of €50-60/tonne ($68-$81/tonne) for the month, sources said, in line with ethylene and propylene September contract hikes.

Activity in both markets slowed down considerably once naphtha prices slipped following an easing of tension over Syria. Spot prices reached a peak at the end of August to early September, as naphtha prices were firm, buoying both monomer and polymer prices. By mid-September lower numbers were heard.

Demand has slowed down and expectations of lower monomer contract prices have led to a near standstill in polyolefins markets this week.

“Demand is weak,” said one seller, “but prices can’t go down. Costs are high.”

A couple of producers have said they expect to decrease prices in line with any decrease that occurs in the ethylene and propylene monomer contracts, but they intend to hold on to margins.

On Friday morning an initial October ethylene contract was settled at a reduction of €35/tonne, at €1,225/tonne FD NWE.

Spot low density polyethylene (LDPE) prices rose above €1,400/tonne FD (free delivered) NWE (northwest Europe) in early September and low-end prices were now moving towards €1,300/tonne FD NWE, according to some traders, with most business done higher than this.

Some levels were still see as high as €1,390/tonne FD NWE but business was generally being done on a truck by truck basis.

PP spot prices were also under downward pressure, with copolymer levels heard around €1,280/tonne FD NWE, from a high of €1,350/tonne FD NWE in some cases early month.

There was no sign of a price collapse, however.

“Buyers want lower prices, for sure,” said one trader, “but we still move what we can at decent prices.”

Many players saw the current slipping of spot prices as representative of October business.

All players expect a decrease in upstream monomer contracts, it was just a matter of where prices land as to how much sellers were prepared to give away this week.

Buyers said the level of demand in October would determine how much prices fell.

Meanwhile. All sources waited patiently for the settlement of the ethylene and propylene monomer contracts.

($ 1 = €0.74)

By: Linda Naylor
+44 20 8652 3214

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