US PE producers offer 5 cent/lb drop for June

20 June 2012 19:44  [Source: ICIS news]

HOUSTON (ICIS)--At least four producers in the US polyethylene (PE) market have said prices will be down by 5 cents/lb ($110/tonne, €87/tonne) for June contracts, but buyers say they see room for more downward movement, sources said on Wednesday.

The announcement by the producers is the first official notification of a price reduction for June contracts, sources said. However, buyers and other market participants said they believe prices could still fall by as much as 7-8 cents/lb for the month.

"It's just a proactive move on their part to try to hold it at five," said one distributor. "I think it should be more."

Other buyers agreed, pointing to low feedstock costs as justification for a larger decrease.

Spot ethylene prices dropped to a 20-month low on 13 June, trading twice at 39.50 cents/lb, representing more than a 15% drop since the start of the month. Prices have firmed back up to 41 cents/lb this week.

One producer said it is firm on the 5 cent/lb reduction, based on a drop in feedstocks balanced with improving domestic PE demand.

"The drop is on the cost side - our demand is pretty strong," the producer said. "We think this is the right number."

May contract prices for low density PE (LDPE) were at 79-81 cents/lb DEL (delivered), linear low density PE (LLDPE) butene were at 70-73 cents/lb DEL and high density PE (HDPE) blow moulding prices were at 68-70 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 = €0.79)

By: Michelle Klump
+1 713 525 2653

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