HDPE Pipe buyers, sellers at odds over October reductions

04 October 2013 10:07  [Source: ICIS news]

LONDON (ICIS)--Discussions on European high density polyethylene (HDPE) pipe October contacts have begun, but buyers and sellers are giving different targets for price movements, sources said late on Thursday.

Buyers want a minimum decrease in line with the €35/tonne ($48/tonne) drop in ethylene, with some pushing for a monomer plus €10/tonne reduction.

“We expect to see around monomer [decrease in October], some bigger converters may get more,” a buyer said, adding that current demand levels could give buyers more negotiating power: “The main reason is not fantastic demand in October”.

“Buyers will say demand is low to get lower prices. We do not see yet demand dropping off in October,” a producer said.

However, a second producer said that buyers in Poland and east Germany were pushing for reductions of €45-50/tonne, and in general, October prices are likely to fall in line with the monomer.

“We are also seeing the demand from customers to go further down than the monomer reduction for standard pipe 100 and 80, it is unavoidable”.

Producers are targeting reductions of €20-30/tonne, less than the feedstock reduction because of the need to strengthen margins.

Sellers said that October demand should be above levels seen in late September. Buyers who were watching naphtha prices fall during the second half of September, using up inventories rather than buying at higher prices, may have an element of restocking in October.

In addition, October is traditionally the last good month in terms of construction activity before winter weather arrives in Europe, and producers hope this factor, together with some restocking, will strengthen October order volumes.

Buyers though do not see signals of significant change in October demand. One buyer said that production levels have already been set for October and price reductions will not see an up-tick in volume even if prices are lower.

A second buyer said its demand levels were as forecast.

There was also expectation of lower ethylene prices for November among some buyers, which could again cause a wait-and-see attitude to purchasing in October.

“Some customers are speculating that prices in November will be even lower than in October and therefore who ever can wait will wait as long as possible,” a trader said.

($1 = €0.73)

By: Matt Tudball
+44 208 652 3214

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