PE players in Europe discuss January pricing with an eye on February

12-Jan-15

Polyethylene (PE) players in Europe are positioning themselves for January pricing discussions, simultaneously considering what might happen in February, sources as per sources in ICIS. Buyers said they were being offered price decreases of €90-100/ton for freely-negotiated business. Current offers are not enough for some buyers as they keep an eye on upstream movements. Accounts with ethylene links will usually have the full €130/ton January ethylene monomer drop transferred to their pricing this month. Traders have been unable to buy material at workable prices, and expectations of lower levels in February make potential buyers cautious, but sources are watching Asian price movements closely. Falling crude and naphtha prices are leading to widespread expectations of a lower ethylene contract next month, which they think will inevitably lead to further PE erosion. Under these circumstances, buyers are expected to buy only need based. Lower naphtha prices are also expected by lead to a ramping up of crackers in Asia, which will have an impact on supply globally. China’s domestic PE prices slumped this week, tracking sharp declines in crude values and amid rising inventory of most local producers. Imports have been reduced in volume into Europe since September in particular, because of the weak euro, and because sellers have been able to get better netbacks from other regions, but a slowdown in Asia could lead to material being diverted to Europe in the coming weeks.