Corrected: Dow seeks 10 cents/lb increase for all US PE grades by Oct

03 September 2013 18:56  [Source: ICIS news]

Dow seeks 10 cents/lb increase for all US PE grades by OctoberCorrection: In the ICIS story headlined "Dow seeks 10 cents/lb increase for all US PE grades by Oct" dated 3 September 2013, please read in the third paragraph ... "one source close to the company said in explaining the price increases" ... instead of ... "the letter stated". A corrected story follows.

HOUSTON (ICIS)--Dow Chemical plans to increase prices of all US polyethylene (PE) grades by 5 cents/lb ($110/tonne, €84/tonne) in October on top of previously announced 5 cents/lb September increases, but sources said on Tuesday that chances of the market accepting the increases are low.

Dow is citing stronger demand in its October announcement of a 5 cents/lb increase following the company’s 5 cents/lb announced increase for September, according to a letter it sent to customers at the end of last week.

“Demand has been outpacing our ability to supply the market,” one source close to the company said in explaining the increases. “August was very strong and prices for crude oil are up."

It was the first nomination heard by US PE producers for October. Most have already announced increases of 5 cents/lb for September, with Total going as high as 7 cents/lb.

However, sources close to the buying side have said that they doubt that Dow, along with the other producers, will manage to even get the full 5 cents/lb that they are seeking for September.

“Today, September increases look weak,” one source on the buy side on Tuesday.

Other buy-side sources have said that it would be difficult for producers to push through any increase, pointing to similar nominations in recent months that have not had success.

Late last week, producers had to settle their August contracts flat even as they had sought for the most part increases of 2 cents/lb for high density PE (HDPE) and 4 cents/lb for linear low density PE (LLDPE) and low density PE (LDPE), respectively.

However, at least one source from the trading side has said that the announced allocation on HDPE announced by ExxonMobil last week for production from its Baton Rouge plant in Louisiana could put some pressure for higher HDPE prices. Other sources disagreed.

The 900,000 tonne/year plant is the biggest HDPE plant owned by ExxonMobil and the second largest of all US HDPE plants, according to sources. The allocation is due to problems with a pipeline supplying ethylene to the plant.

Besides Dow, Total and ExxonMobil, other large North American PE producers include Chevron Phillips Chemical, LyondellBasell, Westlake, INEOS, Nova Chemicals and Formosa Plastics.

($1 = €0.76)

By: Renzo Pipoli
+1 713 525 2653

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