Polyethylene (PE) spot prices in Europe have taken a dive this week as some sellers try to tempt buyers into sales at May prices, as per ICIS. It is almost impossible to differentiate between bids and offers and business done, such is the spread in the market. “I’m doing lots of business at low prices on top of my normal contracted volumes,” said a large converter, “I think what we are seeing now is May prices being done in April.”
The direction of May prices in unclear, as players await ethylene contract to be done. A decrease is still expected in the May ethylene contract, but the reduction could be tempered by the rise in the naphtha market. Naphtha has moved up from a low of US$778/ton CIF (cost, insurance and freight) NWE (northwest Europe) last week to US$817-819/ton CIF NWE on Friday. The April ethylene contract stands at €1,265/ton (US$1643/ton) FD (free delivered) NWE. At the end of March the naphtha price was at US$883-887/ton CIF NWE.
Buyers say they have already been granted the drop in the ethylene contract price for PE in May, whatever that might be, by more than one major supplier, while others wait for the contract settlement to be done before making their intentions clear. One theory in the market is that producers will let prices fall sharply in May in a move to bring recalcitrant buyers back to the market. Against this background some very low spot offers are being made, well below the level of the ethylene contract price.
Low density polyethylene (LDPE) monthly business has dropped by around €60/ton, in line with the April ethylene contract, but spot prices have lost by as much as €150/ton at the same time.
The sharpest falls are heard in the high density polyethylene (HDPE) sector as material from new Middle Eastern production has been offered into Europe. Blow moulding has been particularly strongly affected. The May ethylene contract is expected to settle imminently and this will show some direction for May PE pricing. Sellers hope this will bring buyers back to the market as prices could be reaching the bottom. Not all players agree, however.
29-Apr-13 
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