European PE sellers may attempt to stem the decreasing trend

Players in Europe report that PE producers have given signals of possible attempts to stop the decreasing trend via minor increases for European cargoes, as per ChemOrbis. These sellers may be trying to pave the way for a reversal in April when the high season is supposed to begin for several end product applications. Upstream, Brent crude oil futures for April delivery cargos lost US$1.76/barrel week over week while prices still indicated an increase of US$1.51/barrel with respect to a month ago. Spot naphtha prices softened US$15/ton on CIF NWE basis over the week, whereas they were up US$20/ton from a month ago. Spot ethylene prices on FD NWE basis represented €15/ton drops both week over week and from early February. In Italy, March PE prices were announced with rollovers to up to €20/ton drops on the month following €20/ton lower ethylene contract settlements in Europe. Producers elected to approach the market with steady offers from late February levels, while minor drops mostly came from the distributors’ side. However, this week a distributor of a West European PE producer has warned their customers that they will be seeking €20/ton increases on their PE prices next week. A West European producer source also underlined, “PE prices decreased sharply during last month, so we will try to avoid strong discounts this month.” A South European producer reported that they officially announced rollovers on their PE March list prices. “We will most probably concede to €30/ton discounts for LDPE and HDPE b/m, €20/ton for HDPE injection, €10/ton for LLDPE while we expect to obtain a rollover for HDPE film. In the meantime, we expect a reversal in April with quite strong price hikes,” a source at the producer stated. A film converter, who hoped to buy West European LDPE with €20/ton discounts, reported that in the spite of his inquiries he did not receive many offers recently. “We are a bit worried about a possible reversal in trend in the second half of the month,” he noted. A packaging converter said they have not received many offers this month so far and purchased only two cargoes of LDPE. “We received rollovers or minor drops from end February. We heard talk of price hikes for April and for this reason we bought small quantities even though we didn’t need them,” he said. Another packager said, “Our regular Central European supplier has already closed his weekly sales now and he won’t offer cargoes until next week when he thinks PE prices will start to move up.” A packaging converter in Austria highlighted, “Our regular European suppliers are seeking rollovers from February citing the short supply. We expect to obtain €20/ton discounts though in line with the ethylene drop. Nonetheless, there is market talk about a possible reversal in the market trend in April.” In Turkey, there is market talk about a firmer stance on the side of European suppliers recently although players are not sure whether potential increases would see acceptance since no major pick up is foreseen in demand throughout March ahead of the elections at the end of the month. A trader reported that their South European supplier lifted their PE prices by €20/ton this week. “We are also aware of the hike attempts by producers in Europe. We are not sure whether hike attempts will work or not as they will depend on naphtha and crude oil markets. Nevertheless, this is a strong signal that prices will not record further decreases,” he stated. Another trader thinks that these hike intentions won’t work at this point given slack demand. An agent of a South European source reported that they do not have much material in stock, adding that they have been able to conclude some deals for March. “We believe that the market is near the bottom and demand will pick up in the weeks ahead,” he mentioned. According to ChemOrbis, meanwhile, a couple of traders heard that the domestic producer, Petkim issued some increases on their export LDPE film prices this week. The producer had lowered their list prices three times in a row during February in order to obtain some stock relief.