US PE producers offer 3 cents/lb cut for October - buyers

12 October 2011 18:28  [Source: ICIS news]

HOUSTON (ICIS)--Two US polyethylene (PE) producers have announced they will reduce October contract prices by 3 cents/lb ($66/tonne, €48/tonne) for all grades, sources said on Wednesday.

Buyers suggested the announcement is an attempt by producers to keep prices from falling further.

"It's probably an attempt to put a stake in the ground," one source said.

Whether the 3-cent/lb decrease is a starting point or an ending point for negotiations is unclear, with some buyers saying they believe prices will see a larger decrease in October and others saying further reductions will not come until November.

While a decrease of more than 3 cents/lb may not be market-wide for October, sources said producers seem willing to make one-on-one deals with large volume buyers.

Buyers and distributors said price reductions were inevitable, based on low feedstock ethylene prices and soft demand for PE.

However, as recently as last week, some producers pointed to higher ethane prices to explain why they were firm on pushing through a 5 cent/lb increase in October - the same 5 cent/lb increase they have sought, without success, every month since May.

Current prices for linear low density polyethylene (LLDPE) butene were at 71-74 cents/lb DEL (delivered); low density polyethylene (LDPE) film prices were at 80-82 cents/lb DEL; and high density polyethylene (HDPE) blow moulding prices were at 69-71 cents/lb DEL, for small volume buyers, as assessed by ICIS.

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


For more on PE visit ICIS chemical intelligence

By: Michelle Klump
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