US PE hike sticks in April, more sought in May

06 May 2008 22:52  [Source: ICIS news]

HOUSTON (ICIS news)--Soaring crude oil prices helped US polyethylene (PE) producers to raise April prices 3 cent/lb ($66/tonne or €43/tonne), ending six months of frustrated attempts to pass through higher feedstock costs amid weak domestic demand, buyers said on Tuesday.

“[Producers] stuck their foot in the ground and said ‘this is it,’” a buyer said.

Producers said they would seek to implement the second half of the active 6 cent/lb price increase initiative in May, but buyers questioned whether there was enough strength in the market for another 3 cent/lb price increase.

A follow-on 5 cent/lb price hike is scheduled for June, but has already been postponed several times, buyers noted

The April increase marks the end of a flat period for PE pricing that extends to mid-November last year, according to price assessments by global chemical market intelligence service ICIS pricing.

Weak domestic demand stifled efforts to pass through feedstock costs to PE prices during the first quarter of 2008, buyers said. A producer said April PE demand was good for low density polyethylene (LDPE), but not linear low density polyethylene (LLDPE). High density polyethylene (HDPE) demand was deemed moderate.

Following the April price increases, US domestic prices for LDPE film were assessed at 80-84 cents/lb on a delivered basis by ICIS pricing.

By comparison, LDPE film prices a year earlier were assessed at 62-65 cents/lb.

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

($1 = €0.65)

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By: David Barry
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