US PE producers backing off of 4 cent/lb June price hike

27 June 2013 22:36  [Source: ICIS news]

US PE producers backing off of 4 cent/lb June price hikeHOUSTON (ICIS)--Many producers in the US polyethylene (PE) market have agreed to push a proposed 4 cent/lb ($88/tonne, €68/tonne) price increase from June to July for all but high density polyethylene (HDPE) grades, sources said on Thursday.

For HDPE, many producers are now pushing for a 2 cent/lb increase for June, with at least one producer saying it will split the original 4 cent/lb increase with 2 cents/lb in June and an additional 2 cents/lb in July, sources said.

Such a scenario would mean a split settlement between HDPE grades and other grades, including low density polyethylene (LDPE) and linear low density polyethylene (LLDPE).

While split settlements are unusual in the PE market, one occurred earlier this year, with HDPE grades increasing in February, while LDPE and LLDPE grades rolled over in February. In March LDPE and LLDPE grades saw an increase, while HDPE grades were flat.

The proposed increases for HDPE in June are based on tight supply, particularly with two force majeures during the month, including at Chevron Phillips Chemical and Formosa Plastics.

"I think it is tight enough to warrant an increase of some kind," said one distributor.

Also, demand has been fairly strong in the HDPE sector in June, particularly in the HDPE pipe segment, based on growth in the shale gas sector, according to some market participants.

However, some buyers said they will continue to push for a flat settlement, arguing that the market is not tight enough to justify an increase. 

Sources said they expect contract negotiations to continue through the end of the month.

Current 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 = €0.77)

By: Michelle Klump
+1 713 525 2653

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