Dow and Exxon announce 5 cent/lb Jan PE price hike

05 December 2012 19:54  [Source: ICIS news]

HOUSTON (ICIS)--US polyethylene producers Dow Chemical and ExxonMobil have each announced a 5 cent/lb ($110/tonne, €84/tonne) increase on all grades of PE, effective on 1 January, sources said on Wednesday.

ExxonMobil announced it was pushing its previously announced 5 cent/lb increase from November into January, with no price increase announced for December, according to a 4 December customer letter obtained by ICIS.

Dow said the January increase was in addition to the previously announced increase, meaning the company will seek a 5 cent/lb increase in December and a second 5 cent/lb increase in January, according to a 30 November customer letter obtained by ICIS.

NOVA Chemicals announced last week it was cancelling the previously announced 5 cent/lb increase from November. The company has not made any additional price increase announcements, sources said.

Buyers and other market participants said they do not believe any price increase will be implemented in December, particularly with ExxonMobil and NOVA already signaling that pricing will be, at a minimum, flat for the month.

Some buyers have said they believe prices could drop by an additional 2-3 cents/lb in December, based on lower feedstock prices, healthy producer inventories, and relatively weak demand.

However one market participant said it is seeing an increase in low-priced spot offers this week, adding that if suppliers sell enough into the spot market, they can hold contract prices steady.

"If they can clearly define that spot is spot and has nothing to do with the contract, they can do their best to keep the contract price from coming down," the source said.

Historically, PE prices tend to rise in the first few months of the year, with increases seen in either January or February. If prices move down again in December, some sources said they believe producers will be able to implement a January increase.

Current prices for linear low density polyethylene (LLDPE) butene film were at 65-68 cents/lb DEL (delivered), low density polyethylene (LDPE) film prices were at 74-77 cents/lb DEL and high density polyethylene (HDPE) blow moulding prices were at 63-65 cents/lb DEL, for small volume buyers, as assessed by ICIS. 

($1 = €0.76)

By: Michelle Klump
+1 713 525 2653

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