Low density polyethylene (LDPE)
Low density polyethylene (LDPE) prices decreased from February to mid-May, largely in line with upstream naphtha prices, but the spread between ethylene and LDPE prices decreased.
Production was cut back substantially to accommodate the poor demand of the polyethylene (PE) market in general in Europe.
Producers’ inventories fell, mainly because of production cutbacks rather than any strength in demand, and producers aimed to instil a sense that prices had reached the bottom of the current cycle. That view is by no means certain, but spot prices were rising in mid-May.
Many buyers expect the resurgence in demand to be short-lived as buyers restock. Traders have been squeezed out of the market and are unable to cover new sales with material at workable prices.
Linear low density polyethylene (LLDPE)
Linear low density polyethylene (LLDPE) prices slipped from February to mid-May and production was cut back in line with poor demand. C4 (butene based) LLDPE availability was well-balanced to tight throughout the quarter.
Other LLDPE grades were on the long side, in spite of cutbacks, and the availability of the new metallocene linear low density polyethylene (MLLDPE) from Cologne in Germany affected the LLDPE market in general as material was offered into a market in which demand is weak.
Imports of MLLDPE were also offered at low prices and, while volumes were not strong, prices had an influence on the LLDPE sector as a whole.
By mid-May, availability of C4 LLDPE in particular had tightened and spot prices were beginning to increase. Many buyers expect this phenomenon to be short-lived as converters replenish stocks.
High density polyethylene (HDPE)
High density polyethylene (HDPE) prices slipped from February to mid-May and demand was poor. The spread between ethylene and HDPE narrowed. Imports of HDPE blowmoulding and film in particular were offered into Europe and maintained a ceiling on pricing.
European production was cut back in line with poor demand. HDPE injection was less available than blowmoulding and film grades, as imports were not as widespread as other HDPE grades, and traders were not able to replenish their inventories at workable price levels.
Producers sent out the message that prices have reached the bottom of the current pricing cycle, but buyers said they expect any upturn to be short-lived as fundamental demand remains weak.
There has been little market impact from Dow’s closure of its Tessenderlo, Belgium, HDPE plant at the end of 2012.
Updated to mid-May 2013