10 October 2013 17:09 [Source: ICIS news]
LONDON (ICIS)--Flat demand caused by cautious buying sentiment in the European high density polyethylene (HDPE) pipe market are forcing producers to lower October targets and pass on the full feedstock cost pass-through, players said on Tuesday.
Producers had initially wanted to retain some of the €35/tonne drop in the October ethylene contract price to improve margins, but ample supply means it is now a buyers’ market.
One producer said it has had to lower its prices in line with the feedstock reduction in order to get volumes in October.
“If you want to get some volume, this [reducing prices in line with monomer] is where to go,” the producer said.
It added that buyers are pushing for €5-10/tonne below the ethylene drop, or going to other suppliers who are willing to reduce prices.
A second producer is aiming to defend its margins, offering a €25/tonne reduction for October in certain regions. Southern European buyers are pushing for higher reductions in October, it said, adding that the Polish market is particularly bearish, but has been for some months.
Buyers expect lower feedstock prices in November and are trying to use existing stock rather than purchase additional volumes at higher prices.
It is hard to get a clear picture of seasonal demand because some buyers are waiting for more information on next month's price direction, which is keeping demand flat.
“The very fact that buyers defer orders because they are expecting low prices next month dampens demand in the current month,” a buyer said.
October is one of the last months for construction before demand starts to diminish in the colder winter months.
The majority of talks are on-going for October business.
Year on year demand levels for October are almost in line with 2012 levels, though 2013 is marginally lower, a producer said. However, producers are not seeing levels of demand to allow them to retain some of the ethylene cost drop.
($1 = €0.74)
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