25 January 2013 20:56 [Source: ICIS news]
The increases gained significant traction earlier in the month, based on reduced supplier inventory levels after a strong month of exports in December, sources said.
Rising spot ethylene prices, caused by several planned and unplanned cracker outages, helped to seal the deal, buyers and suppliers said.
"We are all up the nickel," said one buyer. "With ethylene the way it is right now, it was a foregone conclusion."
The tightness in the ethylene market has caused some tightness in the PE market - particularly for those producers who are not fully integrated, sources said. Linear low density polyethylene (LLDPE) and some grades of high density polyethylene (HDPE) were heard to be the tightest.
One PE producer agreed that some suppliers are probably slowing production rates in an effort to conserve ethylene, given concerns about continuing tightness in that market.
With the January increase settled, market participants said the fate of a proposed 4 cent/lb increase for February is less clear.
One buyer said that a week ago, it would have given the measure no chance of being implemented. However, now the buyer said there is a possibility that at least some of the increase will be implemented, based on upstream supply tightness.
Another market participant gave the measure a 50-50 chance of being implemented.
With the increase, prices for LLDPE butene film were at 70-73 cents/lb DEL (delivered). LDPE film prices were at 79-82 cents/lb DEL, and HDPE blow moulding prices were at 68-71 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, Total, Nova Chemicals and Formosa Plastics.
($1 = €0.75)
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