PE, PP buyers in EUrope hopeful for relief in July

25-Jun-13

A downtrend in crude oil and naphtha prices have made polyethylene (PE) and polypropylene (PP) buyers in Europe hopeful of relief in the form of stable or even lower prices in July, as per traders in ICIS. After dropping below the US$100 per barrel threshold, Brent crude oil has moved up once again, but buyers sense the possibility of lower downstream offers on lower feedstock costs. In the week ending 14 June, polyolefin and olefin European price driver naphtha was traded as high as US$868/ton CIF (cost insurance freight) NWE (northwest Europe), while on Friday 21 June it had dropped to US$821/ton CIF NWE. By midday on Monday, naphtha was back up to US$827-829/ton CIF NWE. This is an indication that polymer prices could well be on the decline. PE as well as PP demand was strong in Europe in May, as buyers returned to the market following a period of weak volumes at what they saw as the bottom of the cycle, to replenish empty stocks. Though June volumes are also good, they are not as strong as in May.