LONDON (ICIS)--Polyethylene (PE) volumes have been disappointing for some sellers in October, several said on Friday.
Many put this down to pre-buying in July to September, end-year stock positioning, and also the looming threat of imports from new capacities.
“It’s certainly more difficult than last month,” acknowledged a producer. “We expected a repetition of September, but there is more resistance. Converters seem to have stock.”
Not all producers agreed with this, however, and some were seeing sustained demand. It was not clear if this was linked to rumoured production problems or not.
Another factor that is only just coming into play in the PE market is 2018 contracts, and discussions surrounding next year’s terms were just beginning.
Many buyers will be running down stock for the end of the year, and they are also waiting for the influx of imports from North America in particular. Recent extreme weather events have potentially delayed the start-up of some plants, but many expect product to be arriving in the first quarter of 2018.
Sellers are looking for margin improvement in October following the €30/tonne increase in the October monthly ethylene contact. There was evidence of plus €50/tonne at some accounts, but retroactive buyers were generally targeting a plus €30/tonne, and no more.
In the spot sector, many sellers were disappointed in sales volumes in October.
“They [converters] are just covered,” said one, and this sentiment was expressed by several sellers that would normally deal with smaller and medium-sized buyers.
“They just buy what they need.”
Spot prices have moved up, but the price ranges of end-September have barely changed in many cases, and many buyers this week reiterated earlier sentiment that there are no product shortages.
PE is used in packaging, the manufacture of household goods, and also in the agricultural sector.
Pictured: Polymer façade on the Walbrook building, London (Source: Hufton + Crow / View Pictures/REX/Shutterstock)