14 November 2011 17:02 [Source: ICIS news]
HOUSTON (ICIS)--US Dow Chemical told customers it will implement "demand management" for certain linear low-density polyethylene (LLDPE) resins produced at its St Charles operations facility, sources said on Monday.
The action is a result of "unexpected operational difficulties", according to a customer letter obtained by ICIS.
"We are currently assessing the full extent of the supply disruption but find it necessary to institute demand management immediately for certain LLDPE resins," said the letter, dated 11 November.
Dow did not say whether "demand management" was the same thing as a sales allocation.
It is not clear what caused the operational difficulties. A company spokesman did not immediately respond to a request for comment.
Without knowing the duration of the difficulties, sources said it is difficult to estimate how the action would affect November contract negotiations.
One source suggested it would not have much of an impact, because buyers do not tend to buy in large quantities at the end of the year.
Producers, including Dow, have notified customers that PE prices will increase by 5 cents/lb ($110/tonne, €79/tonne) in November for all grades, along with an additional 6 cent/lb increase in December.
Buyers have said weak domestic demand will probably keep prices from rising. Several buyers suggested the market would settle flat for the month.
Dow has an 815,000 tonne/year capacity LLDPE unit at its St Charles operations facility in Taft, Louisiana, according to ICIS plants and projects.
For more on PE visit ICIS chemical intelligence
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