Buyers and suppliers said May demand for many applications was lacklustre, particularly following a dismal first quarter
May prices in the US polyethylene (PE) market settled flat for the third month in a row, with producers saying supply was tight enough to keep prices from falling despite softer than expected demand, sources said on 29 May.
With the rollover, prices for linear low density PE (LLDPE) butene film were at 83-85 cents/lb ($1,830-1,874/tonne) DEL (delivered), low density PE (LDPE) film prices were at 92-94 cents/lb DEL and high density PE (HDPE) blow moulding prices were at 83-85 cents/lb DEL, for small volume buyers, as assessed by ICIS.
While producer inventory levels have grown at the end of April, sources said there were enough minor production glitches in May to tighten supply to the point that producers felt no pressure to lower prices.
The most significant production outage during the month affected Dow Chemical, which put some customers on allocation following problems at its Plaquemine, Louisiana, cracker, sources said. Buyers and suppliers said there were a handful of other minor outages that tightened supply.
“We had a problem and others had problems,” said one producer. “It is just one of those deals where it is really one after another, and it is going to be like that for a while.”
The producer said while each small outage would not be enough to impact the market, when you take them collectively, they add up to a lot of lost production and have resulted in suppliers having to draw down inventories.
The tight supply did not cause prices to rise because domestic demand has been softer than expected for this time of year, sources said.
Buyers and suppliers said May demand for many PE applications was lacklustre, particularly following a dismal first quarter. However, both buyers and suppliers said they feel confident that demand will continue to improve in June.
“We had been waiting for business to pick up in our seasonal construction and agricultural sectors,” said one buyer. “They have picked up substantially over the past month.”
Sources are divided on prospects for a June price decline.
Some buyers said they see room for a drop of around 2 cents/lb, particularly once ExxonMobil lifts its allocation on PE out of Baton Rouge on 1 June, following the return to operation of the Evangeline pipeline. Other sources said they expect prices to remain steady for the near term.
Major North American PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total, NOVA Chemicals and Formosa Plastics.