US PE pipe majors revise price quotes on rapid ethylene hikes

04 March 2010 18:37  [Source: ICIS news]

HOUSTON (ICIS news)--Two large US polyethylene (PE) pipe producers, PolyPipe and Performance Pipe, announced on Thursday that they are revising price quotations because of rapidly escalating feedstock ethylene costs, sources said.

Both companies are significant users of PE from Chevron Phillips Chemical, which declared force majeure (FM) on ethylene and propylene late yesterday, according to market sources.

“Existing and new quotations must be escalated and all new purchase orders that refer to quotes dated before March 4 will need to be re-priced,” Performance Pipe, a division of Chevron Phillips Chemical, said in a letter to its customers.

The company cited an unplanned production interruption at Chevron’s Sweeny complex in Texas, in addition to several other recent unplanned ethylene outages in the industry.

“As a consequence, there will continue to be ethylene and polyethylene sales allocations that will further limit the supply of polyethylene resin,” the letter said.

In its letter to customers, PolyPipe said it expected resin availability to be problematic and pricing to be volatile for the next 45-90 days.

“This is driven by an already extraordinarily tight supply situation and the CPChem cracker going down in addition to it,” said Lee Mizell, executive vice president of sales and marketing at PolyPipe.

He said the company rarely has had to revoke open quotes to customers.

“We anticipate we’ll have material to run, but it will be at a higher price and later date than originally planned,” he added.

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

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By: David Barry
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