06 September 2012 18:09 [Source: ICIS news]
Recast with paragraphs 4-6
HOUSTON (ICIS)--US polyethylene (PE) contracts ended August in a split settlement, with at least one producer settling at an increase of 3 cents/lb ($66/tonne, €52/tonne) while most other producers pushed through a 5 cent/lb increase, sources said on Thursday.
NOVA Chemicals set the floor by nominating a 3 cent/lb increase for all grades for August. While there was some talk of at least one other producer meeting the competitive price for certain grades, most other producers held firm on a 5 cent/lb increase, sources said.
Feedstock ethylene costs, which increased by nearly 10% from July for contract buyers and by 14% for spot buyers, offered strong support for the full increase, according to one producer. Also, PE supply disruptions caused by Hurricane Isaac contributed support to higher prices, sources said.
Several PE plants in Louisiana were shut down or were operating at reduced rates during the last week of August, including Dow's plants in Taft and Plaquemine and ExxonMobil's plants in Baton Rouge.
"The market is tight," said one producer. "There seem to have been some interruptions in the marketplace, some related to the hurricane and some not, but they seem to have caused an issue."
Buyers agreed the supply tightness gave producers the ability to push through a larger increase.
Market participants described the split settlement as unusual, with some suggesting that the market would come back together in September.
NOVA Chemicals, which had previously announced an additional 3 cent/lb increase for September, notified customers on Thursday it would decrease that to 2 cents/lb, according to a customer letter obtained by ICIS.
The additional 2 cents/lb for NOVA in September would bring the company in line with the rest of the market, particularly after other producers were heard to push a previously announced September increase to 1 October.
In its letter, NOVA said it would seek an additional 5 cent/lb increase on 1 October, matching a previously announced 5 cent/lb increase for 1 October from ExxonMobil, sources said.
With the increase, prices for linear low density polyethylene (LLDPE) butene film were at 67-70 cents/lb delivered (DEL), low density polyethylene (LDPE) film prices were at 76-79 cents/lb DEL and high density polyethylene (HDPE) blow moulding prices were at 65-68 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 = €0.79)
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