US June PE prices fall 4 cents/lb, more drops likely - buyers

09 June 2010 21:01  [Source: ICIS news]

PE prices plunge four pennies per poundHOUSTON (ICIS news)--Several US polyethylene (PE) producers have lowered June prices by 4 cents/lb ($88/tonne, €74/tonne), signalling that inventories have grown too high, buyers said on Wednesday.

Sources said they expected further price erosion as the month progressed.

“I expect more, maybe a couple of cents,” a buyer said. “Our demand isn’t slow. I think they just built up inventory while pretending they were short.”

Other sources said the initial 4-cent price drop could grow to 6-8 cents by the end of the month.

The early price concession was seen by buyers as an attempt to limit the downward momentum in the PE market.

“If anything it will cause customers to wait,” a buyer said. “It will cause the reverse reaction to what they were hoping for.”

The buyer noted that the offered 4-cent PE decrease, combined with a 6 cent/lb drop in May, still fell short of a 10.75 cent cumulative drop in the feedstock ethylene contract price during April and May.

With the end of the second quarter approaching, producers were under additional pressure to clear their books but lacked a strong export outlet.

“US producers want to move big quantities to China, but China is not buying big quantities at this moment,” a market participant said. “Everybody is waiting for the bottom, and for crude oil to stabilise.”

US high density PE (HDPE) blow moulding was at 66-68 cents/lb DEL in bulk with June price movements still pending, according to ICIS pricing.

Sources said producers were planning to widen the spread between low density PE (LDPE) film in June because of tight supply in that grade.

LDPE prices fell by 4 cents/lb in May, compared with 6 cents/lb for other grades.

Major North American PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total, NOVA Chemicals and Formosa.

($1 = €0.84)

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

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By: David Barry
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