Europe PE buying slows down as buyers expect lower prices ‘after Easter’

LONDON (ICIS)–Polyethylene (PE) buying in Europe has slowed down significantly in April, and sentiment among many buyers was for prices to fall after the upcoming Easter holidays, sources said on Thursday.

“It’s very quiet,” said a distributor. “Prices are not falling, but they [buyers] expect some adjustment after Easter.”

This sentiment was echoed by several players this week.

“It is very quiet,” agreed another distributor. “Buyers have been buying one truck more rather than one truck less in the first quarter, and now they’re waiting for lower prices.”

“I think buyers have some stock,” said a producer. “Not huge amounts, but they can hold off buying for the moment.”

Sellers did not expect prices to go down in April.

“Whether the expectations of lower prices are reasonable I don’t know. Naphtha is going up and monomer won’t be going down,” said another producer.

“Market fundamentals have not changed to the extent that prices could fall. There’s a lot of tactical buying going on,” it added.

The slate of cracker outages was still ongoing, and Slovnaft has also now thrown its hat into that ring.

There have been no unexpected issues surround the turnarounds, however, and before they began, PE producers had said they would be able to cover all contractual volumes as long as there were no unexpected issues.

Crude oil and naphtha prices have also rallied, leading to less pressure upstream, and ethylene spot prices are still being done higher than the current April contract level of €1,050/tonne FD (free delivered) NWE (northwest Europe).

Once the planned shutdowns come to an end later this quarter, many sources expected monomer prices to begin to slip.

The spread between ethylene and PE has been steady to rising in the past few months, and PE buyers were eager for this trend to come to a halt.

April is a short month, so it depends if buyers can hold out for longer than “after Easter” or if sellers’ stocks have risen to the extent where some might to begin offering incentives to buy.

New capacities from north America are not expected to have a significant effect before the end of the year, said many sources.

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

Focus article by Linda Naylor

Picture: ‘Polytunnels’ used in agriculture, containing PE. Pictured, a fruit farm in the UK. Source: Tim Graham/robertharding/REX/Shutterstock