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Will European PE continue to shrug off next ethylene outcome in Dec?

by ChemOrbis Editorial Team -
  • 23/11/2017 (09:52)
In Europe, PE players are mostly sidelined after closing November deals with decreases of up to €60-70/ton despite the stable outcome of ethylene contracts and the firmer energy complex. Now, they have started to voice early expectations for December ethylene contracts on a stable to slightly firmer note. This is because they believe that higher energy and naphtha costs will either counterbalance the ethylene supply length in the region and result in rollovers or overshadow it and lend support to an increase in monthly contracts.

However, PE prices are likely to follow a stable to softer trend regardless of the outcome of the next ethylene contracts for another month, players widely argue. Some think that PE prices have room for further decreases, considering that December will be a short month in terms of working days and sellers will deplete stocks amid inventory management concerns.

Others, meanwhile, claim that PE prices might remain stable with the support from the upstream markets. A distributor in Italy noted, “Demand has not been strong. We could achieve deals only when we offered lower prices. We think that producers mostly hold high stocks and for that reason, PE prices might remain mostly stable, shrugging off strong energy costs.”

Another distributor reported, “Demand has slightly picked up recently as buyers feel that PE prices have reached the bottom. They are likely to pre-buy in December to have some material when they come back from holidays. Plus, our West European supplier has tight availability for certain grades of LDPE. Therefore, although we expect a slight increase in ethylene contracts, we anticipate stable PE prices for December.”

Accordingly, expectations about a rebound appear to have been delayed to January, as many participants concur.

A distributor in the Netherlands said, “We have lowered our prices, albeit in smaller amounts this week. We are not in a rush to sell out as prices may stabilize in December and turn bullish in January.”
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