Price and market trends: US Sept polyethylene contracts settle up 5 cents, producers aim for Oct hikes

11 October 2013 09:56  [Source: ICB]

Prices for US polyethylene (PE) went up across all grades for September contracts by 5 cents/lb ($110/tonne, €81/tonne) because strong seasonal demand met several supply disruptions, particularly affecting high density polyethylene (HDPE) availability, market sources said on 
1 October.

This was the first time that producers were successful in implementing a contract price increase since June, when PE contract price increases were limited to a 2 cents/lb rise just for HDPE grades.

Nominations for increases in all grades, including low density polyethylene (LDPE) and linear low density polyethylene (LLDPE) had existed for the previous months but could not 
be implemented.

SUPPLY DISRUPTIONS

However, in September, there were two force majeure declarations on HDPE production affecting LyondellBasell’s plant in Matagorda, Texas, and Formosa’s HDPE plant in Point Comfort, Texas.

Thetwo force majeure declarations were announced as ExxonMobil was having pipeline problems to move ethylene to its biggest HDPE plant in Baton Rouge, Louisiana. This has been taking place since late August, when the company declared a product allocation.

“Supply is really only tight on the HDPE. I have not had any problems in getting LDPE or LLDPE yet somehow the producers were able to successfully drag the LDPE and the LLDPE into the 5 cent/lb price increase,” one source said.

LyondellBasell said around 12 September that its HDPE plant in Matagorda, Texas, which is estimated by ICIS to have 695,000 tonnes/year capacity, was facing mechanical difficulties that were serious enough to justify a force majeure.

Five days later, Formosa Plastics declared force majeure on HDPE products from its 650,000 tonne/year plant in Point Comfort, Texas.

This followed what it described as an “incident” that sent five people to the hospital.

ExxonMobil’s ethylene pipeline problems at its largest HDPE plant in Baton Rouge, which has a 900,000/tonne capacity, were originally disclosed in late August, and according to at least two sources, the allocation continues as of 1 October with the company putting pressure for early buying forecasts.

HDPE supply became so tight in the second half of September that there was little or no product being available to offer for export, sources said.

OCT HIKES PROPOSED

Looking into October, Dow and INEOS were seeking additional increases of 5 cents/lb for all PE grades. But Dow has pushed back its increase to November, sources said. Market sources said that after Dow’s announcements, PE October prices appear set for a rollover from September. They will likely keep the 5 cent/lb increase from the September contracts but not increase more, sources said.

One source said that with other companies such as Chevron Phillips Chemical, ExxonMobil, Formosa, LyondellBasell and NOVA Chemicals not seeking price increases for October, Dow changed its plan to avoid being underpriced. Dow officials did not confirm the information.

The September price increase occurred at a time of very strong seasonal demand as converters increase production to prepare for the Christmas holiday season, one source said. The strong demand which is expected to continue in October, may help producers keep the September gain though it is unlikely they will see another increase, one source said.

Plant situations are expected to improve, sources added.

Following the September settlement, prices of LLDPE butane film were at 79-81/lb DEL (delivered), LDPE film prices were at 88-90/lb DEL and HDPE blow moulding prices were at 79-81 cents/lb DEL for small volume buyers.


By: Renzo Pipoli
+1 713 525 2653



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