European buyers expect lower PP, PE prices in October following drop in monomer contracts; ethylene contracts in October fell €35/tonne to €1,225/tonne, propylene contracts down €40/tonne to €1,110/tonne

, October 23, 2013 () – European players expect lower polyethylene (PE) and polypropylene (PP) prices in Oct 2013, following the drop of monomer contracts. Ethylene contract in Oct dropped by EUR 35/tonne to EUR 1225/tonne, while the propylene contract decreased by EUR 40/tonne to EUR 1110/tonne, both based on FD (free delivered) NWE (northwest Europe). Some buyers were hoping for below EUR 35-40/tonne price reductions of the upstream monomer contracts. One major buyer said that if naphtha remains on a $900/tonne range, producers will have difficulty in limiting the price drop to the monomer. However, naphtha demand is not bad and cutting the price below monomers' is being considered, a producer said. Strong sentiments in the monomer markets were driven by the increase in naphtha prices in early Sep 2013 as well as EUR 50-60/tonne price increases in Sep monomer contracts. This improved demand in the polyolefins markets. However by end-Sep, tensions in the Middle East eased and naphtha prices relaxed and PE and PP demand became weaker. Producers increased stock levels following low levels in Aug, and buyers have been destocking as price hikes are not anticipated in the coming weeks. Majority of PE and PP grades' spot prices have decreased by end-Sep. In 1H Sep, several low density polyethylene (LDPE) prices increased beyond EUR 1400/tonne FD (free delivered) NWE (northwest Europe). On 3 Oct, price reductions accelerated. A trader claimed that it was able to sell at EUR 1300/tonne FD NWE but there were lower prices. Similarly, prices of PP also fell. In early Sep, prices of homopolymer injections were sold at EUR 1300/tonne FD NWE, but current prices are below EUR 1200/tonne FD NWE. Traders are more pressured than producers, as many buyers are currently focused on achieving their end-year volume rebates with producers. The present drop in prices is the first time since May, but many buyers expect it to last until 4Q 2013. A graph shows spot FD NWE polyolefin prices (EUR/tonne) in Europe from Oct 2012 to Sep 2013. Original Source: ICIS Chemical Business, http://www.icis.com/, Copyright Reed Business Information Limited 2013.

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