Price and market trends: Europe PE spot prices rise as monthly prices fall

24 March 2014 00:00 Source:ICIS Chemical Business

Spot polyethylene (PE) prices in Europe are firming while monthly prices slip following a €20/tonne drop in the March ethylene contract price, sources said on 14 March.

Some low density polyethylene (LDPE) producers have said they have sold out of product after a strong start to the month, prompted mainly by very low prices, according to buyers.

“We are very satisfied with volumes and prices in March,” said one producer who put LDPE net prices at €1,290-1,310/tonne FD (free delivered) NWE (northwest Europe) for the first half of the month.

Levels of €1,230/tonne FD NWE were widely said to be available on a spot basis early in the month, but sources said they had now firmed to around €1,260-1,270/tonne, with little available at this level now.

EU PE

“Low spot offers have gone, and prices are coming back,” said one large buyer. “Spot is no more at the levels reached 10 days ago.”

“Buying is still timid, but supply is now restricted,” said a trader. “Customers are still scared of holding stock but prices are getting back to more realistic levels.”

Bids at €1,230/tonne are now dismissed as too low, and with the March ethylene contract at €1,180/tonne FD NWE, there is still little slack between monomer and polymer. A similar situation was seen in the linear low density polyethylene (LLDPE) sector.

Some sources questioned the reasoning behind the amount of material offered by producers at low prices in early March.

“The market was confused,” said one observer. “It looked like sellers were scared of not selling all their volumes [for the month], and now some are sold out.”

CONTRACT VOLUMES

For contracted volumes, prices are falling by up to €30/tonne, with much business still under discussion and not yet finalised. Not all sellers are accepting prices will go down when pricing is finalised at the end of the month, however.

“We are still looking for a very clear rollover from our customers,” said the producer.

Spot activity early in the month is expected to have an impact on contracted prices, however.

“Our contract price is now above the spot price that producers offered earlier this month,” said another buyer.

Traders have often not been able to compete with producers in the PE sector. “The market is quiet,” said another trader, “and traders have difficulty finding volumes at workable prices.”

Offers from the US and South Korea were too high to work under such circumstances, they said.

The high density polyethylene (HDPE) sector remained weaker than LDPE and LLDPE, but here too there were signs that small quantities were being sold at higher prices. Low levels below €1,200/tonne FD NWE remained at some accounts, however.

Imports in the HDPE sector were having a greater impact than in LDPE and LLDPE, and sources said this was because of increased volumes that entered Europe at the end of 2013, ahead of an increase in import duties from GCC (Gulf Cooperation Council) countries.

By Linda Naylor