US PE February contracts increase by 3 cents/lb

02 March 2012 19:29  [Source: ICIS news]

PE rises 3 centsHOUSTON (ICIS)--US February contract prices for polyethylene (PE) rose on average by 3 cents/lb ($66/tonne, €50/tonne) for all grades, as most producers agreed to accept half of their initial nomination, sources said on Friday.

Producers had been seeking a 6 cent/lb increase for the month, based on higher ethylene costs.

"It is spot ethylene pushing it," said one PE producer. "The margin is totally out of the PE segment, and so we are getting to the point where it makes more sense to sell ethylene than polyethylene right now."

However, weak demand and high margins, which have increased with lower-priced ethane, kept producers from being able to achieve the full increase, sources said.

"Demand is OK, but it is not setting the world on fire," said one buyer. "And the high prices tend to disenchant people from buying."

By agreeing to an increase of 3 cents/lb for February contracts, producers have pushed the remaining 3 cents/lb to March.

At least one producer was heard to be seeking a 10 cent/lb increase in March, which included the 3 cents/lb from February and the 7 cent/lb increase previously nominated for March. However, most sources said it would be virtually impossible for producers to implement a 10 cent/lb increase in one month.

With the increase, prices for linear low density polyethylene (LLDPE) butene film were at 74-77 cents/lb DEL (delivered), low density polyethylene (LDPE) film prices were at 83-85 cents/lb DEL and high density polyethylene (HDPE) blow moulding prices were at 72-74 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, NOVA Chemicals, Total Petrochemicals and Formosa.

($1 = €0.75)

By: Michelle Klump
+1 713 525 2653

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