US PE contract prices fall 4-6% in June on weak demand

30 June 2011 18:41  [Source: ICIS news]

Falling quartersHOUSTON (ICIS)--US June contract prices for polyethylene (PE) fell between 4-6%, depending on the grade, based on weak demand and downward pressure from global markets, sources said on Thursday.

Producers announced price reductions of between 2-3 cents/lb ($44-66/tonne, €30-46/tonne) for high density PE (HDPE) grades, 4 cents/lb for linear low density PE (LLDPE) grades and between 4-6 cents/lb for low density PE (LDPE), sources said.

With the reduction, prices for LLDPE butene film were at 74-77 cents/lb DEL (delivered), LDPE film prices were at 84-86 cents/lb DEL and HDPE blow molding prices were at 72-74 cents/lb DEL, for small-volume buyers, as assessed by ICIS.

Though split settlements were once unusual, sources said they have become more common.

The split between high and low density price reductions is an attempt to remove the premium from low density grades, which are currently more readily available in the market, one producer said.

"If you look at high density right now, it is basically sold out and overbooked in the market place … whereas low density and linear low seem to be quite flush in the market," the producer said.

The drop in contract prices follows several weeks of significant decreases in spot prices, which have fallen between 3-10 cents/lb in June, depending on the grade, with the largest drops in LDPE.

Prices are expected to fall again in July, sources said, adding that another decrease is necessary to make US exports more competitive with Asian and Middle Eastern prices, which are 15-16 cents/lb lower than US prices.

"The question is what do [producers] have going for them to keep prices from falling?" one buyer said.

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

($1= €0.69)

For more on PE visit ICIS chemical intelligence

By: Michelle Klump
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