08 February 2013 10:08 [Source: ICB]
At least two US polyethylene (PE) producers announced a 4 cent/lb ($88/tonne, €65/tonne) increase for March PE, sources said the week ended 1 February.
INEOS announced a 4 cent/lb increase on all high density polyethylene (HDPE) resins, while Dow Chemical announced a 4 cent/lb increase for all PE resins, according to copies of customer letters obtained by ICIS.
Both increases are effective from 1 March.
It is not clear if other producers will follow suit with similar increases, sources said.
PE contract prices for January increased by 5 cents/lb, based on tight supply and increasing spot ethylene costs.
Market sources have divided opinions on whether producers will be able to implement some or all of the 4 cent/lb increase announced for February.
"I would typically say that it is very difficult to get back-to-back price increases, but what has changed significantly in this situation is that the ethylene market has just gone crazy," said one producer, who said it sees a good chance for the entire 4 cent/lb increase to be implemented in February. "That is putting a lot of pressure on the system."
Some buyers have said they believe at least part of the increase may be implemented, based on ongoing tightness in the ethylene and PE markets.
Spot ethylene prices have risen by as much as 30% since December, following a number of planned and unplanned cracker outages. In some cases, sources have suggested producers may be better off selling spot ethylene than making PE.
However, other buyers have said the February price hike proposals may lose momentum once export demand declines, and ethylene spot prices decline.
Buyers said there are no fundamentals to specifically support the March price increases, adding that they are likely to be designed to help bolster the February price increase.
Price for linear low density PE (LLDPE) butene film are at 70-73 cents/lb DEL (delivered), low density PE (LDPE) film prices are at 79-82 cents/lb DEL and HDPE blow moulding prices are at 68-71 cents/lb DEL for small volume buyers.
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