BofA sees PE and PS prices down 1-3% in 2008

10 September 2007 20:03  [Source: ICIS news]

HOUSTON (ICIS news)--World polyethylene and polystyrene prices could fall by some 1-3% in 2008, Bank of America (BoA) said in a research report distributed on Monday.

Capacity to come on line in ethylene from Asia and the Middle East in 2008 to 2009 could have implications for producer operating rates and resin prices, BoA analyst Kevin McCarthy said.

Citing concerns about US consumer spending, the analyst suggested that foodservice packaging and consumer products demand might dampen demand for resins. Were that to occur, it would be met by a drop in resin prices, he said.

US market sources are concerned over the impact that large-volume imports from the Middle East will have on the North American and global markets.

US polyethylene (PE) buyers have already begun negotiations to buy product from Saudi Basic Industries Corporation (SABIC), industry sources said on Monday.

Current discussions only involved butene grade of linear low-density PE (LLDPE). Other grades will be offered later, according to US sources.

A buyer said it expected to place orders from SABIC for a few containers as soon as it approves specifications by end-September or early October. The material will be priced competitively at 1 or 2 cents/lb under current US contracts, said the source.

On plastics demand, the BofA report mentioned the potential for “skirmishes” over market share through consumer bag product promotion relative to the third quarter of 2006. Difficult operating quarters for certain bag producers in second quarter 2007 made it unlikely for this to occur, the report added.

(Additional reporting by Ron Coifman)

By: John Waggoner
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