Europe PE spot prices drop further on poor demand

LONDON (ICIS)–Polyethylene (PE) spot prices are falling further as weak demand leaves some producers with spare volumes, sources said on Thursday.

“Buyers are seeing February as the peak, so they are buying hand to mouth,” said 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, with most regular spot business 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 to take advantage of lower spot prices, sometimes from their regular supplier, 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, but many buyers expect prices to be lower in March.

The ethylene contract is not yet under serious discussion, and some players talk 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.”

PE is used widely in the packaging and household goods market and also in the agricultural sector.