Europe PE spot prices drop further on poor demand

28 February 2014 09:52 Source:ICIS Chemical Business

Demand continues to fall as many buyers expect that March PE prices will be lower than February

Polyethylene (PE) spot prices are falling further as weak demand leaves some producers with spare volumes, sources said on 20 February.

“Buyers are seeing February as the peak, so they are buying hand to mouth,” according to one producer.

Low density polyethylene (LDPE) spot prices have fallen fast in February, and levels of €1,200/tonne FD (free delivered) NWE (northwest Europe) are heard from southern Europe in particular. Most regular spot business is moving at around €1,250/tonne on a net basis.

In mid-January, levels as high as €1,370/tonne were being traded in parts of Europe.

Monthly contracted business is not settled in many cases 
and several producers are still trying to limit the price 
decrease to €40/tonne, the amount of the drop in the February ethylene contract. This is looking less likely as the month progresses, however.

Many buyers keep contracted volumes to a minimum in order to take advantage of lower spot prices, sometimes from their regular supplier in fact, thereby effectively reducing the average price paid for PE during 
the month.

Some volumes are said to have been sold to traders, and European LDPE prices in the mid-€1,200s/tonne FD NWE are said to be widely offered via at least one large trader.

Low demand seems to stem from the expectation that March PE prices will be at least no higher than February.

However, many buyers expect prices to be lower in March. The ethylene contract is not yet under serious discussion, and some players are talking of a rollover. But converters point to the naphtha price that is fairly solid in dollar terms, though it has reduced in euro terms as the dollar has weakened against the euro.

High density polyethylene (HDPE) is also under pressure and spot prices for some European product are at €1,180-1,190/tonne FD NWE on a net basis.

“The absolute maximum we can get at the moment for HDPE is around €1,230/tonne,” said one seller. Prices had moved as high as €1,270/tonne FD NWE on a net basis in mid-January.

“One supplier is still try to get €1,240/tonne out of me,” said a large HDPE buyer, “but that won’t happen.”

By Linda Naylor