US PE contracts split in June, with HDPE grades seeing increase

02 July 2013 20:30  [Source: ICIS news]

HOUSTON (ICIS)--US June contract negotiations for polyethylene (PE) ended with a split settlement after producers pushed through a 2 cent/lb ($44/tonne, €34/tonne) increase for high density polyethylene (HDPE) grades and settled flat for others, sources said on Tuesday.

While split settlements are unusual in the PE market, one occurred earlier this year, with HDPE grades increasing in February, while low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) settled flat that month. In March, LDPE and LLDPE grades saw an increase, while HDPE grades were flat.

The split settlement is the result of particularly tight supply for HDPE grades in June, following force majeures at both Chevron Phillips Chemical and Formosa plastics, sources said.

"HDPE is very tight," said one buyer, who noted that high molecular weight (HMW) HDPE is in particularly short supply. "The pipe industry, driven by the shale gas activity, is consuming a lot of HDPE."

Producers had initially sought a 4 cent/lb increase for all grades in June but eventually agreed to push those increases for all but HDPE off until July, sources said.

For July, some producers are seeking the additional 2 cent/lb increase for HDPE grades and the full 4 cent/lb increase for LDPE and LLDPE grades.

However, some sources said they do not see enough demand for LDPE and LLDPE to support such an increase.

Buyers have been pushing for a price decrease for all grades. But unplanned outages in the ethylene market, relatively strong demand for certain PE grades and the opportunity for producers to sell some material into the export market have kept prices from falling.

Some sources said they do not expect to see any decrease until August.

Following the June 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 74-76 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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