LOW DENSITY POLYETHYLENE
Northwest European low density polyethylene contract prices were assessed at Eur1,460/mt FD October 26, concluding the month of October at a rollover on September prices.
“We achieved a rollover this month on contract prices,” a mid-sized converter of LDPE said.
Settlements had been reported at flat from September through the third and last week of October.
Buyers unanimously reasoned a rollover price had been achieved on poor demand, despite producers having to bear an increase of Eur15/mt in feedstock costs.
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The market now looks towards November where a growing consensus is heard around expectations of rollover pricing that month, if the anticipated increase in ethylene costs for November proves true.
“I expect next month to see an increase in ethylene costs equal the margin loss from producers,” a converter source said, arguing this on the likely continuation of low demand.
Platts ethylene contract price indicator for November showed an increase of Eur41/mt above the industry CP of Eur940/mt for October.
Prospects for ethylene have turned bullish amid increases in its primary feedstock in Europe, naphtha.
Spot prices of naphtha cargoes were assessed at $448.75/mt CIF NWE Tuesday, up $26.75/mt from the start of October.
The NWE ethylene CP for the is typically settled by the industry in the final week of the preceding month.
LDPE spot prices showed little change on the week, with indications given at Eur1,170-1,250/mt for delivery in Northwest Europe.
S&P Global Platts assessed prices at the most repeated value of Eur1,250/mt FD NWE, flat on the week.
Spot prices had maintained strength in October despite weakened fundamentals.
Trade sources said that imports into Europe were slowing as demand from Asia had risen.
One converter source said he was expecting to receive LDPE from Iran this month but the delivery had been rerouted to Asia after departure for Europe in search of higher profits.
“Imports were at a high level [in Europe] earlier this month but imports are now even being turned around for Asia,” the converter source said of LDPE.
Further thwarting imports was the effect of a weakening euro, which made dollar-based imports more expensive.
The euro had closed at a low of 1.0891 against the dollar last week, a value not seen lower since the beginning of March this year.
“Imports are more expensive so more interest is being seen in domestic product,” a trade source said, adding this did not mean European prices would rise as poor demand prevented that.
In production news, Ineos’ steam cracker in Rafnes, Norway, is expected to begin producing olefins again at the end of November, a source close to the company said on Wednesday.
An outage at the cracker is not impacting the connecting 140,000 mt/year LDPE plant. Ethylene is being sourced externally, the source said.
US low-density polyethylene export prices were assessed Wednesday at $1,323-$1,345/mt (60-61 cents/lb) FAS Houston, down $22/mt week on week, as market sources said availability seemed to be improving in the long-tight market, and as a result, some lower priced spot resin was being seen.
Rail car pricing indications — where available — were heard in the high 50s cents/lb range for bulk pricing from producers to traders.
Wednesday’s assessment was the lowest since August 18 when it was assessed at $1,312/mt FAS Houston, according to S&P Global Platts data.
Market sources indicated that US prices would still need to move lower to be competitive to most regions, but were encouraged by the cheaper pricing being seen.
There were growing expectations among traders that PE prices could trend lower in the coming month as export activity typically increases at the end of the year and producers could look more aggressively to the export market to manage inventories as domestic buyers seek price relief throughout Q4.
October LDPE domestic contracts were assessed stable at 76-77 cents/lb ($1,675-$1,698/mt) for delivered rail cars based pricing was heard rolling over for October.
Buyers are expected to push for decreases in November and December, sources said, and there were growing calls for prices to fall by 2-3 cents/lb in the coming months.
Some sources suggested a decrease of 5 cents/lb could be warranted by the end of 2016, particularly with demand expected to slow at the end of the year and new capacity set to come on over the next few months in addition to the new polyethylene already being produced in Mexico.
Sources also have pointed to slower demand in October compared to previous months.
Upstream, spot ethylene prices continued to move lower, with the prompt month assessed Wednesday at 27 cents/lb FD USG, a drop of 3.75 cents from last Wednesday.
Market sources have pointed to healthy availability as turnarounds come to an end and some sellers working to lower inventories before the end of the year.
Low-density polyethylene assessments rose $10-$30/mt in Asia this week, pulled higher by stronger demand for film grades in China, sources said this week.
Film grade was assessed Wednesday at $1,280/mt CFR Far East Asia, stable on the day and up $30/mt week on week.
Market sources talked the market in the $1,280-$1,290/mt range, with offers heard at $1,300-$1,320/mt CFR basis.
One market participant said greenhouse agricultural film demand was lending support to prices.
The China domestic assessment rose Yuan 250/mt to Yuan 11,500/mt, illustrating the uptick in demand, sources said.
A source with a major global producer cautioned that the recent increases were the result of short-term tightness in the market stemming from unplanned outages and not so much demand, and expected prices to soften to end the year.
Southeast Asia pricing was nominally stronger on the week, up $10/mt to $1,260/mt CFR basis, tracking the upward movement in China, but with the market talked in a wide margin.
A trader source in Vietnam described the market as “wait and see” in terms of overall demand, with sentiment driving prices.
In India, demand was subdued this week ahead of the Diwali holiday, with sources describing demand as stable but supply as long.
Low-density polyethylene pricing for markets on the Pacific Coast of South America fell for the week, assessed $25/mt lower Wednesday at $1,355-$1,365/mt CFR West Coast South America basis, amid lower pricing from the United States.
Demand was heard to be low along the West Coast, with local distributors said to be dropping prices to facilitate moving product, a market source said.
In Brazil, LDPE pricing also dropped Wednesday, down $30/mt for the week to $1,335-1,345/mt CFR basis, based on lower pricing from the US.
Market sources pointed to a stronger Real and improved public confidence following recent political turmoil with helping drive up demand.
Sources also said end users have ramped up production in recent days and weeks ahead of the Christmas season, which in turn is also improving demand, both domestically and on the import market.
In addition, market sources have been citing local producer Braskem’s November shutdown of one of its steam crackers at Camacari with leading to more import demand.
The Brazilian export assessment remained flat at $1,515-$1,525/mt FOT Brazil, based on Brazil-origin offers of $1,640/mt CPT Paraguay.
The assessment deducts $100/mt for freight and $20/mt for negotiation.
Sources on both sides of the continent also said pricing from Asia has been on the rise, as well as shipping rates from the region, making material from the Far East less attractive when compared with the US and its falling prices.
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