Europe May PE pricing in disarray amid expectations of further price drops

LONDON (ICIS)–Polyethylene (PE) pricing for May contracts is under heavy downward pressure, and at present it can be difficult to distinguish between spot and contracted levels, market sources said on Friday.

The month started sedately enough, with discounts of €20-30/tonne offered by most suppliers, but discounts have deepened as the month has progressed, and spot offers of some PE grades have become abundant from some suppliers.

The reason behind these actions is explained by the drop in demand during the second half of the month, as buyers pick up only minimal volumes ahead of lower prices expected in June. April was also a weak month, following a very strong first quarter.

“June [prices] will be lower,” said a distributor, “so if they [buyers] don’t need product, they wait.”

“Customers are generally well covered,” admitted a trader. “They booked in the first ten days of the month and now they want the June price.”

Some sellers were taking advantage of what many considered to be June levels, to be able to shift some volume.

For May so far, contracted prices have decreased from €20/tonne done at the beginning of the month to as much as minus €60/tonne in some sectors of the linear low density polyethylene (LLDPE) market. There was little homogeneity to the market at present, however.

“It’s really difficult to work out the behaviour of competitors at the moment,” complained the distributor.

Headline low density polyethylene (LDPE) prices were at €1,250/tonne FD (free delivered) NWE (northwest Europe) from some European producers, but there was evidence of activity at much lower levels, from traders with European material, as well as imports. Imports were mainly limited to LLDPE and high density polyethylene (HDPE) grades.

HDPE prices were falling fastest, with €1,100/tonne mentioned for some grades.

Monthly pricing is still under discussion at many retroactive accounts, and May seems to be one of those months were settling late is more advantageous to buyers than settling early.

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