N American buyers may dodge August PE increase

26 August 2009 18:24  [Source: ICIS news]

PE buyers may dodge price hikeHOUSTON (ICIS news)--A North American polyethylene (PE) producer has notified customers that it was postponing a 4 cent/lb ($88/tonne, €62/tonne) price increase by a month to 1 September, making it more likely that other producers will do the same, buyers said on Wednesday.

NOVA Chemicals in a letter to customers said the 4-cent hike, previously delayed to 1 August, “will be implemented to all market segments no later than 1 September, 2009.

“I haven’t heard from the others, but I assume they are going to meet that [competitive offer],” a buyer said.

Producers, including NOVA, were not immediately available for comment.

Buyers said feedstock markets and domestic demand were not strong enough to support the increase proposal.

NOVA said in the letter that firm crude oil and ethane prices, low inventories throughout the resin supply chain and high international resin prices were driving the North American price increase initiatives.

“These dynamics clearly demonstrate a tight North American PE marketplace and support the need for immediate pricing action,” the company said.

Due to careful inventory management by producers and ample export opportunities, forecasted resin requirements were shipping on schedule, but extra orders were not being filled until the next production cycle, buyers said.

“The PE export business to Europe is very good because prices there are so expensive, so that has put US suppliers in a great opportunity to shift to export volumes,” a buyer said.

The buyer did not rule out a partial implementation of the August PE increases, saying that prices could rise by about 2 cents/lb.

This view was supported by another resin buyer, who said brokers had seen PE suppliers recently back off prices by 2-3 cents.

In addition to the 4 cent/lb August increase currently under negotiation, PE producers nominated a follow-on price hike of 4-5 cents/lb.

US high density polyethylene (HDPE) blow moulding prices, not including any potential August increases, were at 52-55 cents/lb DEL (delivered), according to global chemical market intelligence service ICIS pricing.

Major US PE producers include Chevron Phillips, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total and Formosa.

($1 = €0.70)

For more on polyethylene visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect
ICIS has launched weekly pricing reports in Africa for polyethylene and polypropylene. For more information contact Nadine Spoeri


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