Europe LDPE spot below ethylene for first time since 2013

Author: Linda Naylor


LONDON (ICIS)--European low density polyethylene (LDPE) spot prices have slipped again and are now below those of feedstock ethylene for the first time since May 2013.

There are just a few euros difference between LDPE spot prices this month and those in May 2018,  at their lowest point since March 2015.

Prices have fallen this week on the back of ample supply and reduced demand.

“There’s too much material in the market. Everybody wants to sell. It’s inevitable that prices are going down,” said one distributor.

Producers have been complaining about the lack of margin for some time now, as they steadily reduced since their high of 2015 when a series of force majeures at both the cracker and polymer level left the market short of product.

Those days seem long ago, and now the threat of imports from new North American capacities looms large.

Security of supply was the priority in the two years following the 2015 shortages, but now buyers were sniffing the possibility of more material in 2019.

Imports for the moment were expected more in the linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) sectors, rather than the LDPE market.

The trade spat between China and the US could change trade flows, and more US material could find its way to Europe, if it can’t find a home in China, said sources.

So far, though, there has been no significant disturbance from imports, but most sources said this was just a matter of time.

“I expect them [increased imports] by end quarter four [or] early 2019,” said a large buyer.

At present, the European PE market is waiting for the settlement of the October ethylene contract, expected in the coming days.

PE is used in packaging, the manufacture of household goods, and also in the agricultural industry.

Pictured: Agricultural 'polytunnels' – one of LDPE's end markets – in Huelva, Spain
Source: Jassen Todorov/Solent News/REX/Shutterstock 

Focus article by Linda Naylor


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