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The outlook for polyethylene demand in Europe remains flat

November 18/2011

(ICIS) -- The outlook for polyethylene (PE) demand in Europe remains flat, but many players feel that prices will go no lower than current levels in the near future as the spread between ethylene and PE narrows and crude oil and naphtha prices remain strong, market sources agreed on Friday. The cutbacks are not helping yet, said a major PE producer. Market demand is very low. We need to continue to produce at low rates and keep pricing stable now. Even at the big accounts there is an acceptance that prices cant really go much further [down].

Another major producer said: We expect December pricing to remain at the same level as in November, and a mild increase in January and February [of] no more than ?10/tonne ($14/tonne) or ?20/tonne. The eurozone remains very uncertain and we dont expect this to change much in the short term.

In most spot PE business in Europe at present, prices are lower than the headline ethylene contract price, which stands at ?1,095/tonne FD (free delivered) NWE (northwest Europe). This is a gross price, subject to discounts, but the spread between spot low density polyethylene (LDPE) levels at ?1,040/tonne FD NWE, and even below in a couple of extreme cases and ethylene is clearly not sustainable long term.

Perspectives of development of polymer markets, pricing issues and other important aspects will be discussed at The Polymers Summit-2011, which will be held in Moscow on November 30, 2011 at the Ritz Carlton Hotel. The Summit will be organized by MRC with the support of ICIS. The main idea of the Summit is to find a "the golden mean" between producers and converters. When producers receive exactly such margin of production, which helps them to invest in production expansion in order to substitute polymers imports, and the converters receive such price of feedstock that helps them to compete imported finished products. The Summit site gives an access to the live video of the Summit, speakers" presentations, as well as opportunities to ask questions or make appointments to any Summit partcipant.

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