Price and market trends: US January polyethylene contracts settle flat

31 January 2014 10:02  [Source: ICB]

January contracts in the US ­polyethylene (PE) market were assessed as flat on 24 January, after higher feedstock prices and low producer inventory levels following a record exports in December left buyers with little hope for a decrease.

Producers had not sought any increases in January, so the only question that remained was whether prices would fall, as buyers had been hoping. But PE producers exporting more than 900m lb (408,000 tonnes) in December, their inventories were depleted, leaving buyers with little leverage to ask for a decrease, sources said.

The rollover has resulted in a fourth month of flat pricing in the PE market. However, with no price reductions in the PE market in all of 2013, prices remain more than 10% higher than they were in January 2013.

Now, market participants have turned their attention to February price increases of 4 cents/lb announced by most producers.

Export prices in some cases are up by 2-3 cents/lb, which some sources have said supports producers’ push for an increase. A producer also pointed to higher ethylene and ethane prices, which it said helps to justify an increase.

However, some buyers said they believe if producers get anything, it will not be the full 4 cents/lb they are seeking, ­arguing that producer margins are substantial, and supply is fairly balanced.

By: Michelle Klump
+1 713 525 2653

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