US PE producers lower May prices on feedstock pressure

19 May 2010 22:33  [Source: ICIS news]

HOUSTON (ICIS news)--At least two major US polyethylene (PE) producers have lowered prices for May as feedstock ethylene values have fallen rapidly over the past month, buyers said on Wednesday.

One seller reduced its prices by 4 cents/lb ($88/tonne, €72/tonne), and another dropped its prices by 6 cents/lb, sources said.

Some buyers were already making purchases at 6 cents/lb below April, but were only buying enough to make it until June, when more decreases were expected, according to the sources.

Market participants also raised the possibility of even larger May decreases, up to 8 cents/lb, but so far that had been limited to speculation.

Buyers were bringing heavy pressure on producers to give quick price relief after the PE market surged on average by 18 cents/lb during the first quarter.

PE producers were quick to pass along higher ethylene costs, a buyer said, so they should be quick to give up their pricing gains with ethylene prices receding.

“Otherwise, those guys are just printing money now,” the source said.

Spot feedstock ethylene prices have fallen by about 30 cents from an average in the low 70s cents/lb during the first half of April, sources said.

April contract ethylene settled down by 3 cents/lb at 52.5 cents/lb, and another downward settlement was expected in May.

US domestic high-density PE (HDPE) blow moulding was at 72-74 cents/lb delivered (DEL) prior to any May decreases, according to data from global chemical market intelligence service ICIS pricing.

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

($1 = €0.82)

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By: David Barry
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