US PE demand slackens, threatening price hikes

18 April 2008 19:24  [Source: ICIS news]

HOUSTON (ICIS news)--Proposed US polyethylene (PE) prices for April were unlikely to be accepted because demand has softened and feedstock ethylene spot prices have slipped, traders and a buyer said on Friday.

Producers have been unable to achieve widespread implementation of a 6 cent/lb ($132/tonne) increase proposal that was first introduced for November 2007. PE buyers said producers were asking for a 2-3 cent/lb increase in April.

A PE seller said it is currently filling April orders at a 3 cent/lb increase relative to March. The source said April sales have been the strongest of any month so far this year, boosted by seasonal buying trends.

However, PE buyers maintained a gloomy view of the market and insisted higher prices would not remain in place.

“Nobody can say we have a strong market right now,” a PE buyer said. “We have not seen stronger demand this month.”

The buyer added that resin converters could not raise prices to their own customers, because those end-users could easily take their business elsewhere.

A trader said PE price erosion was a possibility in April if producers are unable to export enough material to keep the US market in balance.

The logistical bottleneck for PE exports has not worsened recently, the trader said. However, US domestic demand has softened, adding pressure to the export side.

The producer source said that if overall US exports continue to grow, PE sellers would run into problems booking containers and outgoing cargo space.

Container availability was tighter on the Gulf coast than in the northeastern US, and PE producers were repositioning containers from Louisiana to Houston, Texas to deal with export volumes.

US low density polyethylene (LDPE) film prices were assessed at 78-81 cents/lb, according to global chemical market intelligence service ICIS pricing.

US PE producers include Dow, Chevron Phillips, LyondellBasell and Westlake Chemical.

($1 = €0.63)

For more on polyethylene visit ICIS chemical intelligence

By: David Barry
+1 713 525 2653

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