Momentum grows for lower US May PE on producer's 4 cent/lb drop

11 May 2012 23:01  [Source: ICIS news]

HOUSTON (ICIS)--Momentum is growing for a price reduction in the US polyethylene (PE) market, now that one major producer has agreed to reduce prices for all grades by 4 cents/lb ($88/tonne, €68/tonne) for May, sources said on Friday.

ExxonMobil announced it will lower the price for all grades of low density polyethylene (LDPE), linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) by 4 cents/lb on 1 May, according to a customer letter obtained by ICIS.

The letter was the first official notification of a price reduction for May contracts, sources said.

However, buyers and even one supplier said it is possible that May contract prices will fall by as much as 6-8 cents/lb, based on a sharp drop in feedstock ethylene costs.

Buyers said they have been seeing spot prices for prime PE at a 10 cent/lb discount from April prices. The prevalence of low-priced spot material indicates there is room for a significant drop in May, buyers said.

One market participant said it saw the letter from ExxonMobil was an effort to keep prices from falling more than 4 cents/lb.

April contract prices for LDPE were at 86-88 cents/lb DEL (delivered), LLDPE butene were at 77-80 cents/lb DEL and HDPE blow moulding prices were at 75-77 cents/lb DEL, for small volume buyers, as assessed by ICIS.

Major North American PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total, NOVA Chemicals and Formosa Plastics.

($1 = €0.77)


By: Michelle Klump
+1 713 525 2653



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