European polyethylene producers are selling product in the spot market to cut inventory because of slow demand thereby undercutting traders and distributors, sources said.
Sources reported that aggressive selling by European producers intensified following the June ethylene contract price settlement at Eur1,205/mt ($1,517/mt) FD NWE on May 25.
The monthly CP plunged by Eur120/mt on May's value.
"Offers for injection grade high density PE range from Eur1,160-1,200/mt FD NWE, with European producers in the low end, while Egyptian product [is] in the high end," a converter said.
But converters were still holding back.
"On [a] daily basis we get lower prices so I am not placing additional offers," a converter said.
"Macroeconomic growth concerns coupled with slowdown in industries like industrial films, beverage and [the] food industry [are] a perfect cocktail to prevent buying in the polyolefin value chain," a second converter said.
To further counter thin buying, European polyethylene producers took to selling product outside Europe and scaling back production rates.
"The [recent] fall in [the] euro has made us competitive in our non-core areas and we are taking advantage of that," a European producer said, adding they were selling in Latin America, North Africa and Turkey.
The euro/dollar rate was $1.2589 Thursday morning.
May's average was $1.278, according to Platts data.
"We are going to slow down production next week," a source from Borealis said Wednesday, adding plants' operating rates will be reduced to 73-75% of operating rates from around 80-85% in May.
The lackluster market over the past two months has led to a build up in inventory "so we have to align production again" to current demand, the source said.
