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Spot LDPE, LLDPE prices hit a decade low in Italy

by Manolya Tufan -
  • 09/09/2019 (09:23)
In Italy, PE prices have slumped further down, with the downtrend resuming after a mostly stable August. The larger-than-expected decreases in ethylene contracts pushed spot LLDPE prices to a decade low shortly after LDPE.

Initial PE offers reflect ethylene drops partially

PE offers were initially revealed with smaller decreases than the €40/ton drop in the ethylene contracts earlier in the week. Some sellers opted for decreases of €20-30/ton on the low ends of the ranges in particular to recover some of their margins, while buyers pushed to obtain the entire ethylene drop.

Several players opined, “On-going market discussions may end up at a cumulative drop of €40/ton but not beyond that as the prevailing LDPE and LLDPE levels in the spot market stand at par or slightly below the monthly contract level.”

Spot LDPE dips to 10-year low in July, LLDPE follows after a month

The weekly average of spot LDPE prices in Italy already hit their lowest levels since 2009 as of H2 July, according to ChemOrbis Price Index.

According to ChemOrbis data, spot LLDPE prices in Italy have also recently hit their lowest levels since December 2009, while HDPE film prices stand at their lowest since July 2012, on a weekly average basis.

In Northwest Europe, meanwhile, spot LDPE stands at lowest levels since July 2012 on a weekly average, while HDPE film is at its lowest since February 2015.

Will low prices attract demand?

Buyers might be attracted to the multi-year low levels if sellers decide to concede to the entire ethylene drop, according to some. Plus, converters’ stock levels are not believed to be comfortable as they just came back from a long summer holiday.

This has not translated into better returns from the market due to the ongoing “wait and see” stance and hand-to-mouth purchases on the part of buyers.

Therefore, other players remained skeptical about an improvement in downstream buying interest amid comfortable supplies and economic concerns. They also attributed this stagnancy in demand to the large volumes that were sold in the past couple of months.

One of the buyers said, “We secured a good amount of material back in July to be covered in September, taking advantage of the low prices and considering that it was the bottom. However, it was apparently not. We will try to obtain decreases again this month.”

How about influx of US PE cargos shifted to Europe?

According to import statistics, HDPE imports from the US to Italy in H1 this year already more than doubled the amount recorded in all of last year.

Similarly in EU28, HDPE imports from the US almost six-folded in H1 this year when compared to the same period of last year. In other words, the EU’s imports of US HDPE in January-June 2019 already exceeded the imports recorded throughout 2018 by 40%.

Now that the latest round of tit-for-tat tariffs is applied to US LDPE import cargoes in China, this , in turn, has raised concerns that more US cargos may head towards Europe.

A distributor opined, “We expect to see more material coming from the US, not only for HDPE and LLDPE but also for LDPE following the new tariffs on US LDPE applied by China.”
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