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Stable to softer PE trend prevails in Europe amid soft demand, poor netbacks

by Manolya Tufan - mtufan@chemorbis.com
  • 12/10/2020 (10:08)
In Europe, PE markets opened the month of October with mostly rollovers despite slightly lower ethylene contracts. Being pressured by thin trading, some sellers applied small discounts. Yet, they remarked that there was scant room for decreases as prices are already low compared to other major markets.

Europe lags behind other markets

A stable to softer trend has been in place in Europe’s PE markets since September, defying global patterns.

The lack of PE imports from the US amid hurricane related production hiccups has supported the uptrend in major markets. Mid-eastern PE sellers have diverted their allocations to the countries with attractive netbacks, which in turn led to tightness for some grades.

PE sellers try to hinder softening, buyers eye drops

A few PE suppliers have attempted to maintain their prices simply to improve their margins. Considering the overall weakness in the regional markets, some sellers have cut their offers only slightly for another month to speed up their sales.

Converters are waiting on the sidelines as they are asking for discounts in line with the ethylene drop. They expect more sellers to concede to small drops as the month wears on. “Buyers hold onto their existing stocks. Moreover, virus-related concerns deter buyers from buying beyond their needs,” several sellers confirmed.

LD supported by production issues

Lower availability for LDPE has helped sellers to hold onto their offers. Prices may remain relatively flat as this grade has not been pressurized by imports amid few new capacity additions unlike LLDPE and HDPE, according to players. Moreover, LDPE supplies are poised to decline amid regional production issues as well as boosted exports.

A reseller affirmed, “Producers might keep LDPE drops in check due to the scarcity of imports for this grade. We are selling our material mainly with rollovers. Having skipped purchases last month, some buyers accept to pay stable prices. Yet, trading volumes are still tied to basic needs.”

LLDPE, HDPE supplies set to decline

As for LLDPE and HDPE film grades, players believe that supplies may also remain low amid hurricane-hit production in the US. A trader remarked, “There may be no fresh shipments from the US until at least November.”

Some sources already reported that locally held availability for US originated PE has declined. Traders have been shunning imports from the US as prices were visibly higher than the prevailing levels in Europe.
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