US November PE price hike proposal could split market

28 September 2012 21:07  [Source: ICIS news]

HOUSTON (ICIS)--Signs of a new split in the US polyethylene (PE) market emerged on Friday, as one producer nominated a new November price increase.

Dow Chemicals announced it would increase PE prices by 4 cents/lb ($88/tonne, €68/tonne), effective on 1 November, in addition to its previously announced increase of 5 cents/lb for October, according to a customer letter obtained by ICIS.

The nomination diverges from one made by NOVA Chemicals earlier in the week, when it announced it would split its previously announced 5 cent/lb October increase over two months with 3 cents/lb in October and 2 cents/lb in November.

Market participants said they saw the November price increase announcement by Dow as an effort to support the October price increase, arguing that demand is typically not particularly strong in the last quarter of the year.

Others said they saw the move as a sign that the market may split again in October, with Dow and other producers ignoring NOVA's competitive offer.

However, some buyers said they do not expect that any producer will be able to implement an increase in October.

"October is very weak," said one market participant, who said it believed there might be room for a price decrease during the month.

The divergent nominations will cause some confusion, which will not be cleared up until mid-month, said one market participant.

"I think we won't get a good idea of what's going to happen for at least two more weeks when we see if customers are ordering and/or suppliers start building inventory," the source said.

Current prices for linear low density polyethylene (LLDPE) butene film were at 67-70 cents/lb DEL (delivered), 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.

($1 = €0.77)

By: Michelle Klump
+1 713 525 2653

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