European polyethylene contract prices, weighed down after a drop in the ethylene contract price for May, posted this week their first decline in four months.
The ethylene contract price for May was Eur1,325/mt ($1,745/mt) FD NWE, down Eur20/mt from its historic high in April.
PE producers positioned themselves to constrain the decrease to Eur20/mt. "We were hoping to get a rollover, but a Eur20/mt decrease is not unreasonable," one producer said.
A second producer said, "we expect a rollover, but a minus Eur20/mt could well be the compromise at the end of May." Converters were keen to see prices fall by more than minus Eur20/mt. "Demand is not high enough in Europe to keep prices at these levels," a converter said.
"Our suppliers will be more than willing to settle at minus Eur20/mt right now, but we will negotiate for a bigger decline," said another converter.
Contract prices for low density PE were assessed down by Eur20/mt from April's end at Eur1,575-1,580/mt FD NWE.
Converters reported lagging end-user demand in a recessionary environment. Only demand from the beverage industry continued to buck the trend of slowdowns in order income, converters reported. "Work on our machines is good and were running almost 24 hours a day. As it is spring time, demand for sleeves and foils is keeping us busy," one converter reported.
Converters in other markets were less sanguine. "We have switched off some of our machines that make stretch film," a converter said, adding that "Demand is shrinking from most sectors and there is a pressure on prices."
Converters continued to struggle to pass on increases downstream. "Competition in the shrink film market is intense. It is not an environment to increase prices," another converter said.
PE sources added that weakness was more pronounced in the PE film market, while coating and blowmolding grades were stronger. "Films for industrial applications is particularly weak," one said.
