US PE contract prices roll over for July on strong demand

31 July 2012 20:19  [Source: ICIS news]

HOUSTON (ICIS)--US polyethylene (PE) July contract prices were assessed as flat on Tuesday as strong domestic and export demand helped to keep prices stable.

Buyers had initially hoped for a slight price drop in July, after June ethylene contracts settled lower than June PE contracts, leaving what buyers thought was a little more room for some downward movement. The fact that most ethylene crackers were back up and running in July also was expected to help keep feedstock prices low.

However, spot ethylene prices began to climb by mid-month, trading as high as 49.375 cents/lb ($1,088/tonne, €893/tonne) last week. When combined with the strong demand in the PE market, the higher feedstock prices were enough to keep PE prices flat, buyers and suppliers said.

One supplier said prices probably should have moved up for the month, adding that export prices in July were between 3-4 cents/lb higher than in June.

"Demand is strong and business is good," said the supplier. "We were totally sold out in July."

Market participants have turned their attention to August, and are debating whether the 5 cent/lb increase nominated by several producers will be implemented.

Buyers argue that the demand growth in June and July is artificial and related to inventory restocking at the lowest point of the market. Once that demand dries up, there will be little to support a price increase, some buyers said.

Some suppliers have agreed that if domestic demand dries up, it will be difficult to implement the entire increase. However, others say the export market remains strong and will be able to support higher prices.

With the rollover, prices for linear low density polyethylene (LLDPE) butane film were at 63-66 cents/lb delivered (DEL), low density polyethylene  (LDPE) film prices were at 72-74 cents/lb DEL (delivered) 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= € 0.82)

By: Michelle Klump
+1 713 525 2653

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