Europe PE buyers sense prices easing but sellers reluctant to give much away

20 April 2017 13:23 Source:ICIS News

These black spheres are made of polyethyleneLONDON (ICIS)--Polyethylene (PE) buyers are expecting lower prices in May, and some spot prices have eased this week, but most buyers are very reluctant to give away much, sources said on Thursday.

“I don’t have a high stock,” said a trader. “Why should I give away my product?”

Low density polyethylene (LDPE) spot prices have lost around €20/tonne, now trading below €1,300/tonne FD (free delivered) NWE (northwest Europe) at the low end of the range.

While linear low density polyethylene (LLDPE) C4 (butane-based) spot prices are no longer trading in the high-€1,200s/tonne at many accounts, prices have eased by around €20/tonne, according to most sources.

High density polyethylene (HDPE) pricing remains the most lacklustre of PE grades, but even here spot prices of €1,200-1,220/tonne remain the levels most talked.

Buying is slow, however.

“I have seen a radical slowdown in demand,” said the trader. “They [buyers] want lower prices but I don’t have the stock.”

The cost of replacing imports in Europe remains a problem for most traders, as European levels risk falling again, and netbacks are still better in other regions.

Some C4 LLDPE buyers confirmed that product was not easy to come by.

“I’ve had an increase in my resin prices every month so far this year,” said one buyer.

Many buyers were already looking forward to new capacity coming on-stream, mainly in North America, but also from India, but for the moment there was little new supply.

In the HDPE sector, some product was offered from the new plant in Mexico, according to some buyers, but US product was lacking.

“We have some offers [from the US] but at the end when you push for a real delivery, it’s just not available,” said a buyer. “In the second half of the year we expect more but quantities involved in this kind of operation are still very small.”

Others expected little impact from new North American capacities before 2018.

The well-publicised cracker turnaround season in Europe has not led to any shortages in the PE market, and now that some are due back on-stream, buyers are living from the precautionary stock they took in during the first quarter.

Ethylene supply will ease as cracker come back on stream, but a new turnaround season will begin towards the third quarter, and unless crude oil and naphtha prices crash, most sources expect only limited price erosion in upstream pricing.

Under these circumstances, PE sellers expected to be able to hold PE pricing comparatively well in the coming weeks.

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

Focus article by Linda Naylor

By Linda Naylor