European polyethylene buyers envisage lower prices

21-Oct-09

Polyethylene (PE) buyers in Europe have curtailed buying activity and are buying bare minimum quantities this month on expectations that of a further price slide in November. Many see October as a transition month, when October PE prices would be relatively stable ahead of a sustained price fall in the rest of the fourth quarter, due to easing upstream prices and the expected imports from the Middle East. As per ICIS, supply and demand are still good and fundamentally, there is no reason to drop prices beyond the ethylene price drop. However, buyers are trying to settle October PE down by about €15/ton in the monthly October ethylene contract, which was settled at €860/ton FD (free delivered) NWE (northwest Europe). Ethylene is expected to witness a huge drop in November, possibly to the tune of €60/ton from its current level. Low density PE (LDPE), is not short, considered to be in a fine balance, and is trading at €950/ton FD NWE on a net basis in the spot market. Linear low density PE (LLDPE) is considered to be weaker on fresh imports and prospect of a supply glut from the Middle East that has started to impact the European market. Small quantities of South American LLDPE is being offered at below €900/ton FD.