Europe May PE volumes better than expected by month end

LONDON (ICIS)–Polyethylene (PE) volumes have turned out to be good in May, according to several producers on Friday.

Initially the month had looked soft, but buying remained steady, they said, leading to a good month as a whole.

“May order intake has been weird,” said one. “Instead of a good first 10 days then declining, it’s been steady. On Wednesday we reached our monthly volumes.”

“We have seen a very strong May,” said another, “and we’re very close to closing the books for May and start looking into June. Customers continue to report very healthy demand and we definitely see it in our order load.”

Some sellers had feared a downturn during the second half of the month, as was seen in April, and indeed many traders and distributors did experience this, but monthly contracted volumes were said to be good.

“The market has been fairly quiet,” said a third producer, “but we are seeing activity. From my perspective there is a fundamental difference compared to April. Business is still going on.”

Buyers were thought to be buying on a hand-to-mouth basis, however, suggesting that they did not hold much stock, and were not prepared to build any with the prospect of a further price decline in June.

A lower ethylene contract was expected by many in the PE market, as upstream costs were lower and many saw the current cracker margins as unsustainable.

So far, a limited number of lower deals has been offered for June, said sources, but at least one producer was preparing to move PE in line with whatever movements were seen in the June ethylene contract.

New offers were heard €30-40/tonne lower, but there was little confirmation of this from producers so far.

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

Image source: Dinendra Haria/REX/Shutterstock