US PE March contracts increase by 3 cents/lb

29 March 2012 21:19  [Source: ICIS news]

An exhibition of 14,000 transluscent white polyethylene (PE) boxes.HOUSTON (ICIS)--US March contracts for polyethylene (PE) rose on average by 3 cents/lb ($66/tonne, €50/tonne) for all grades, as high spot ethylene prices offered producers momentum to push increases through, sources said on Thursday.

The increase represents the balance of an initial 6 cent/lb increase suppliers sought in February. Weak domestic demand and high margins caused producers to split the increase over two months with 3 cents/lb implemented in February and the remaining 3 cents/lb implemented in March.

"The factors have not changed – it is still the ethyelene market, and it is still tight," said one PE producer. "The ethylene market is driving the market for polyethylene."

Buyers had been hoping for a respite from price hikes in March, arguing that demand remains weak in both the domestic and the export markets.

Talk of high inventories and recent spot prices of generic prime material offered at a 3 cent/lb discount to February contract prices, particularly for linear low density polyethylene (LLDPE) grades, also gave buyers hope that prices could settle flat.

However, producers said reports of an inventory build at the producer level were overstated, saying they believe it is brokers in the secondary market who have excess inventory.

Buyers said they believe suppliers pushed the increase through as a means of getting the price as high as possible before expected decreases in the coming months.

"I think this is an indication that this was their last opportunity for an increase," said one buyer. "All of the turnarounds will be done soon, and prices will come down after that."

With the increase, prices for linear low density polyethylene (LLDPE) butene film were at 7779 cents/lb DEL (delivered) ), low density polyethylene (LDPE) film prices were at 8688 cents/lb DEL and high density polyethylene (HDPE) blow moulding prices were at 7577 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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