US PE June contracts down by 7 cents/lb on feedstocks

29 June 2012 20:25  [Source: ICIS news]

HOUSTON (ICIS)--US June contracts for polyethylene (PE) settled down by 7 cents/lb ($154/tonne, €123/tonne) from May levels, based on low feedstock prices and tepid demand, sources said on Friday.

Producers had initially offered a 5-cent/lb drop for the month. However, buyers were able to negotiate for the extra 2 cents/lb, based on feedstock ethane prices, which reached 26.50 cents/gal during the week - the lowest level since 3 September 2002. Less than robust domestic demand also was a factor weighing prices down, sources said.

"Costs are down, ethylene is back down and demand is sort of weak, not strong for sure, but tepid," said one producer. "Add all of those reasons up, and [prices] are going to come down."

Buyers are predicting another drop for July, with one buyer anticipating a drop of 2-3 cents/lb for the month. The buyer said it had purchased generic prime material in the secondary market at 10 cents/lb below May contract prices, which indicates that prices have more room to fall.

"I think it will go down in July again," said one buyer. "It will go down a couple of cents more and then it will bottom out there until the fall."

However, producers said July pricing will depend on demand. There is a potentital for prices to fall again if demand is off, but if demand improves, prices could remain stable, according to one producer.

With the decrease, prices for linear low density polyethylene (LLDPE) butene film were at 63-66 cents/lb DEL (delivered) ), low density polyethylene (LDPE) film prices were at 72-74 cents/lb DEL and high density polyethylene (HDPE) blow moulding prices were at 61-63 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 Plastics.

($1 = €0.80)

By: Michelle Klump
+1 713 525 2653

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