US PE March contracts see increase for film grades

28 March 2013 17:51  [Source: ICIS news]

HOUSTON (ICIS)--US March contract negotiations for polyethylene (PE) ended with film grades seeing a 4 cent/lb ($88/tonne, €69/tonne) increase, while high density polyethylene (HDPE) injection and blow moulding grades were flat, sources said on Thursday.

The split settlement brings film grades, such as low density polyethylene (LDPE), linear-low density polyethylene (LLDPE), and HDPE high molecular weight film material, in line with the other grades, which saw a 4 cent/lb increase in February.

"It is a done deal," said one producer. "We had taken our high density grades up in February, and now everything else is up by the same amount."

The increases are based on relatively high ethylene spot prices, which remain above 60 cents/lb, as well as lower-than-average supplier inventory levels.

There was some discussion earlier in the month that the film grades might not see the increase, based on the thought that some of the HDPE grades had developed too much of a discount to the film grades.

However, sources said producers held firm on the price increase, and buyers accepted it because many of them had already announced increases to their downstream customers.

Producers have now turned their attention to pushing through an additional 4 cent/lb increase announced for 1 April. There is less support for that increase, with many buyers saying it is unlikely, based on the fact that global prices are falling.

Some producers agreed it will be tougher to implement an additional increase in April, but said some factors, such as a number of cracker turnarounds as well as rising global energy prices could provide some upward momentum for prices.

Following the March settlement, prices for LLDPE butene film were at 74-76 cents/lb DEL (delivered), LDPE film prices were at 83-85 cents/lb DEL and HDPE blow moulding prices were at 72-74 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 = €0.78)

By: Michelle Klump
+1 713 525 2653

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