US PE export prices slide amid slow demand

26 May 2010 23:03  [Source: ICIS news]

HOUSTON (ICIS news)--US polyethylene (PE) export prices have fallen quickly in the past few weeks and sales have been relatively low because of weak buyer sentiment in key overseas markets, traders said on Wednesday.

“Activities are minimal in Latin America. Most people are wait-and-see,” a trader said.

Traders with Chinese re-exports were more aggressive last week because of the sell-off in the US stock market and falling crude oil values, but buying interest for Asian product is waning with more competition from lower-priced US Gulf offers on the way.

“I don’t think there are any people aggressive enough to take that material,” the trader said, referring to Chinese re-exports.

Offers of re-exported high density PE (HDPE) film were heard as low as $1,420/tonne CFR (cost and freight) Latin America, with calculated prices for fresh product about $60/tonne lower, another source said.

Buyers must also contend with a monthlong transit from Asia and, in some cases, a lag of 3-4 weeks between booking a cargo and having it on the water.

By lowering prices now, US producers are introducing a “fear factor” for Latin American buyers who might consider Asian imports, the second trader said.

“[Buyers] start refusing any cargo that takes more than 30 days and start buying US product,” the source said.

Prices in Latin America have provided the best export margins for US producers, but some traders think netbacks to Latin America and Asia could be even by the end of June or early July.

US HDPE bl/mldg (blow/moulding) export prices for bagged material were down by 9 cents/lb ($198/tonne, €160/tonne) over the past four weeks at 54-56 cents/lb FOB (free on board) US Gulf during the week ended 21 May, according to data from ICIS pricing.

Low density PE (LDPE) film export prices have dropped by less than 6 cents/lb in the same time frame, and traders said there were limited offers of that grade.

Market participants said US Gulf PE export prices could drop further based on expected weakness in spot ethylene values.

Spot ethylene for June traded at 38.25 cents/lb on 26 May, down from a trade two days earlier at 40.00 cents/lb.

($1 = €0.81)

For more on polyethylene visit ICIS chemical intelligence
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By: David Barry
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