LDPE prices plunge in Europe amid weakening crude and naphtha

16-Jan-15

Low density polyethylene (LDPE) spot prices in Europe are falling sharply on lower crude oil and naphtha prices, as per sources in ICIS. LDPE is, on net basis are now trading at €1050/ton FD (free delivered) NWE minimum, from a level €1220-1250/ton at the beginning of December. The last time LDPE prices traded at such a level was in July 2012, when Brent crude was trading around the US$100/bbl mark. On Thursday oil was trading around $47/bbl. “My customers are asking why we are not offering much lower prices now that crude has crashed,” said one buyer, typical of many. The price reduction on monthly PE contracted volumes has been less spectacular than in the spot market, but even so, LDPE prices are dropping by at least €100-110/ton for January, following the €130/tonne drop in the January ethylene contract. A further reduction in crude and naphtha prices are expected to lead to another drop in February, so January buying remains very cautious. LDPE monthly discussions will only finally settle at the end of the month, as many prices are still retroactive, but expectations of lower prices in February is putting a strain on the market, particularly for traders, whose inventories are losing value. LDPE is used in packaging and in the agricultural sector.