07 August 2013 22:13 [Source: ICIS news]
HOUSTON (ICIS)--US polyethylene (PE) producer ExxonMobil Chemical clarified its August and September pricing position this week, while other producers added confusion to the market with announcements of their own, sources said on Wednesday.
On 2 August, Exxon sent out two letters to customers announcing a 5 cent/lb ($110/tonne, €83/tonne) increase for September. A letter to US customers said the announcement "supersedes all pending price increases", while a letter to Canadian customers said the increase "is in addition to all previously announced price increases", according to copies of the letters obtained by ICIS.
On 6 August, Esso Imperial Oil, the Canadian subsidiary of ExxonMobil Chemical, issued a clarification saying that the initial 2 August letter "was erroneous and may have caused confusion", according to a copy of the letter obtained by ICIS. The letter further stated that the September price increase announcement supersedes all pending price increases.
The letters indicate that Exxon has taken off the table a previously proposed 2 cent/lb increase for high density polyethylene (HDPE) and a 4 cent/lb increase for low density polyethylene (LDPE) and linear low density polyethylene (LLDPE), which had previously been planned for August.
However, other producers, including Total Petrochemicals and Dow Chemical Company, have left the proposed August increases in place. In 5 August letters to customers, both companies indicated a proposed 5 cent/lb increase for 1 September is in addition to the proposed 2 cent/lb increase for HDPE resins and 4 cent/lb increase for LLDPE and LDPE resins nominated for August.
In a Wednesday letter to customers, Chevron Phillips Chemical Company also announced a 5 cent/lb increase for September but did not address the proposed increase for August.
A 5 August letter from INEOS Olefins & Polymers USA offered an entirely different strategy. In that letter, the company says it will increase prices of all HDPE resins by 3 cents/lb on 1 September, adding that the increase is in addition to the previously announced increase of 2 cents/lb for 1 August.
Ultimately, sources said, most US producers will likely follow Exxon's lead in forgoing an August increase in favour of a September increase, based on Exxon's position as a leader in terms of market share.
However, buyers said at this point, they see no reason for an increase in August or September, based on falling feedstock costs, improving supplier inventory and stable to slightly softer domestic demand.
"We don't see a lot of justification for an increase," said one buyer.
"Frankly, if the Williams thing hadn't happened, our thought is that the market would have started moving down by now," the buyer added, referring to a 13 June explosion at the Williams cracker in Geismar, Louisiana, which caused what is expected to be a 10-month outage.
July 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.
($1 = €0.75)
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