Spot ethylene drops €50/tonne on ample supply, waning demand

23 January 2014 14:31  [Source: ICIS news]

LONDON (ICIS)--European ethylene spot pipeline prices have fallen by €50/tonne week on week on the back of good availability and waning buying interest, market sources said on Thursday.

This week, spot deals for both January and February deliveries were done at €950/tonne FD (free delivered) NWE (northwest Europe), following deals last week at €1,000/tonne FD NWE. Just one buyer was responsible for 2,000 tonnes worth of sales for January and 5,000 tonnes for February.

Spot pipeline prices have been softening since the start of the year primarily because the market has moved back into a better balance following cracker restarts and a hike in cracker operating rates in general after the traditional year-end slowdown.

Demand, having begun the year on a stronger than expected footing due to a combination of re-stocking and shorts coverage, has started to ease off as restocking has been completed while feedstock has weakened – derivative demand often stalls when upstream markets weaken as players speculate on a reduction in the next month's contract price.

“With all the crackers up and running the competition is fierce," a producer said, adding that order intake for polymers had slowed because end markets were anticipating a price decrease for February.

However, naphtha feedstock prices have rebounded this week which has prompted some sources to speculate that €950/tonne is the bottom of the market and that a decrease on the contract price is by no means certain.

Others expect supply to remain on the long side.

“I expect C2 to remain long, so I am not sure €950/tonne is the floor,” a buyer said

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By: Nel Weddle
+44 20 8652 3214

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