Petrotahlil --European plants producing polyethylene (PE) have seen their margins fall week on week due to higher feedstock costs, ICIS margin analysis showed on Tuesday.

In the week to 8 May:

- Naphtha values rose by more than 32%

- LPG values increased by 13%

High density polyethylene (HDPE) contract margins fell by more than 19%, co-product credits rose slightly:

LPG-based HDPE contract margins fell by 14%.

Low density polyethylene (LDPE) contract margins dropped by 14%, co-product credits increased slightly:

LPG-based LDPE contract margins fell by nearly 9%.

HDPE spot margins by feedstock:
LDPE spot margins by feedstock:

In the week to 8 May, demand showed signs of slowing, although this was grade-dependent. Supply was still long and prices were down for all grades modelled.

Integrated margins fell for all grades as feedstock costs increased and product prices fell. Standalone margins also fell with product value decreases, but not as much as integrated producers.

Many sources see May as the potential bottom of the current cycle, as crude and naphtha prices rise, but global oversupply amid poor economies are also weighing on sentiment, leading to a very uncertain situation and outlook.