Europe PE, PP prices softer, demand slow

03 October 2013 11:55  [Source: ICIS news]

Europe PE, PP demand slows, prices fallLONDON (ICIS)--Spot sellers of polyethylene (PE) and polypropylene (PP) are concerned over the low level of demand and falling prices in Europe this week, while producers are more confident, several said on Thursday.

“Our demand isn’t looking too bad,” said a producer,“ the order income is decent and our idea is to drop prices less than the monomer.”

Prices in the spot sector were under stronger downward pressure.

“Demand is not bad,” said a trader. “I even sold quite a lot in the past few days – it’s the price that’s the problem.”

“In the past few days, buyers have been cancelling,” he added.

Spot prices for most PE and PP grades have been heard lower than at the end of September. A wide price range is being discussed, typical of a decreasing market.

In the first half of September some low density polyethylene (LDPE) prices had risen above €1,400/tonne ($1,892/tonne) FD (free delivered) NWE (northwest Europe), as naphtha prices soared on Middle East tensions and polymer buyers feared another upward move. By Thursday, prices were coming down fast.

“I can still sell at €1,300 [/tonne FD NWE],” said the trader, “but there are bids below.”

Likewise, PP prices were down. In early September homopolymer injection prices were trading at €1,300/tonne FD NWE, but now numbers were heard in the low €1,200s/tonne FD NWE.

“Prices are falling on a daily basis,” said another seller.

Business is very patchy, and buyers are only buying what they need.

“It’s difficult to get a clear picture because nobody’s buying,” said another trader.

“Buyers think November will be lower. Naphtha is down and the dollar is down against the euro. There is only one direction for prices to go,” said a distributor. “Buyers are not buying and sellers are getting nervous.”

“They [buyers] can’t wait ad infinitum,” said another seller. “At a certain point they have to buy, but they are buying only what they need and no more."

Traders are under more pressure than producers, as many buyers are now concentrating on reaching their end-year volume rebates with producers. Many buyers have an agreement to reach a certain volume by the end of the year to be able to achieve a discount on the whole volume at the end of the year.

The current downward trend is the first since May, but many buyers expect it to continue into the fourth quarter.

($1 = €0.74)

By: Linda Naylor
+44 20 8652 3214

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