Flat holiday season demand pulls down NWE ethylene FD spot prices to lowest since April

16-Aug-16

Northwest European ethylene spot prices were assessed at a discount of 5% to August and September monthly contract price- at Eur871/mt (US$973/mt). This indicates a Eur15 decrease on the week. European spot ethylene prices slumped to their lowest since April on flat demand because of the holiday season, as per sources in Platts, as well as a drop in the ethylene contract price of Eur20 to Eur925/mt for August.

Despite the bearishness in both ethylene and low density polyethylene spot prices, margins are expected to remain solid looking forward, analysts said last week.
The LDPE-ethylene margin has been consistently increasing over the last few years. In 2014, the average European margin over the year was US$379/mt, rising to US$488/mt in 2015, and US$500/mt so far in 2016. This margin is expected to remain solid, Dow said in an earnings call at the end of July. "Polyethylene prices reflect the current level of robust demand. Derivative demand is much tighter than ethylene demand and will remain the case. We continue to see delays forecast in later start ups."