US PE producers likely to push for 3 cent/lb March increase

08 March 2012 19:58  [Source: ICIS news]

HOUSTON (ICIS)--US polyethylene (PE) producers are expected to push for a 3 cent/lb ($66/tonne, €50/tonne) price hike for March, despite some higher nominations, including one for as much as 10 cents/lb, sources said on Thursday.

In February, producers had initially nominated a 7 cent/lb increase for March. However, when February contracts settled at an increase of 3 cents/lb – half of the 6 cent/lb price bump producers had originally sought – the remaining 3 cents/lb was pushed to March, causing confusion about the total increase producers would seek.

So far, at least three producers have agreed to hold their nominations to a 3 cent/lb increase, pushing the previously announced 7 cent/lb increase into April.

Another producer nominated a 10 cent/lb price hike for March, representing the extra 3 cents/lb from February, plus the previously announced 7 cent/lb increase for March. However, several sources described that nomination as far-fetched.

Still another producer announced it was planning to split the 10 cents/lb remaining from previous February and March nominations with implementation of a 5 cent/lb increase in March and a 5 cent/lb increase in April, sources said.

Other producers were heard to be considering that option, however most market participants agreed it would be difficult to ask for more than 3 cents/lb when three producers have already agreed to that level.

"I think this month, they are going to push for the three, and if they get three, they will be happy," said one buyer, who predicted prices would increase by 2 cents/lb.

Downstream stretch film processors have announced price increases, based on the 3 cent/lb increase scenario, with three processors announcing a 4% increase on or after 26 March, according to customer letters obtained by ICIS.

The letters hint at frustration about the announced increases.

"We understand the stress and difficulty associated with these increases. However, the resin suppliers seem to have multiple increase attempts pending, regardless of market place dynamics," said one letter.

Producers point to higher spot ethylene prices and expected supply tightness caused by ongoing cracker turnarounds as reasons for the price bump.

But buyers said that unless there is a huge demand boost, they don't see a need for another increase, particularly given producers' elevated margins.

Prices for linear low density polyethylene (LLDPE) butene film were at 7477 cents/lb DEL (delivered) ). Low density polyethylene (LDPE) film prices were at 8385 cents/lb DEL, and high density polyethylene (HDPE) blow moulding prices were at 7274 cents/lb DEL, for small volume buyers, as assessed by ICIS.

($1=€0.76)


By: Michelle Klump
+1 713 525 2653



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