Price and market trends: Dow and ExxonMobil announce 5 cent/lb polyethylene hike for January

14 December 2012 10:03  [Source: ICB]

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

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 the week ended 30 November it was cancelling the previously announced 5 cent/lb increase from November but has since announced a January increase.

Buyers and other market participants said they do not believe any price increase will be implemented in December, particularly with ExxonMobil and NOVA already signalling 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, 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.

NEW YEAR TRADITION

Historically, PE prices tend to rise in the first few months of the year, with increases seen in either January or February.

If prices were to 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.


By: Michelle Klump
+1 713 525 2653



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