Europe’s PE markets to extend losses into June

In Europe, spot PE deals have been wrapped up with decreases beyond the ethylene drop in most cases. PE markets are expected to extend losses into the second month amid unsatisfactory demand outlook in downstream sectors.

PE decreases likely to lose steam

Decreases of €100/ton mostly passed on May deals, with resin demand pressured by buying resistance amid inflated prices. Prices are likely to keep falling in June albeit at a slower pace.

As for June, ethylene expectations call for rollovers to slight decreases owing to higher energy complex. PE demand may rise incrementally should buyers return to replenish their stocks after several weeks of sluggishness, rebalancing supply status. Indeed, purchasing volumes in May were not any better than in April. Sellers believe that these factors may keep June decreases in check. June PE prices may see smaller drops of around €50/ton, several players argued.

A trader opined, “Spot LDPE prices may center at €1950-2050/ton FD in June.”

Will non-European origins stop being aggressive?

The emergence of non-European origins has been a pressure point across regional markets. This is because they stand on the low end of the price ranges.

European buyers are not usually engaging in import material, considering shipment delays and uncertain outlook. Yet, regional markets embraced various import origins as well as re-exported cargoes amid juicy netbacks in Europe and downward trend in other major markets.

It remains to be seen whether or not import suppliers will sustain their aggressive policy. This will hinge on the pace of demand recovery after reopenings in Shanghai and seasonal activities that can see a boost from summer vacations.

Overall demand may fall short of expectations

Demand remains the key factor to watch. The decline in overall consumption, triggered by high inflation, weighed on retailing and wholesaling industries. Apart from that, consumers are waiting on the sidelines as they expect to see a decrease in raw material costs.

A pipe maker affirmed slowing demand for HDPE blow moulding grades and shared buy ideas at €1650-1700/ton for this grade.

In Italy and West Europe, overall price assessments last stood at €2050-2150/ton for LDPE film, €1800-1950/ton for LLDPE C4 film and €1800-1930/ton for HDPE film, all on FD, 60 days basis.