US November PE contracts drop 3 cents/lb, first cut in 2 years

HOUSTON (ICIS)–US November polyethylene (PE) contracts dropped 3 cents/lb on falling ethylene prices and weaker demand, sources said on Wednesday.

It was the first cut in two years, since November 2012. PE contracts rolled in October.

The November reduction stems from buyers waiting for lower prices, which has weakened demand for domestic polyetheylene.

The decrease lowered values for linear low density PE (LLDPE) butene film to 83-85 cents/lb ($1,830-1,874/tonne) DEL (delivered); low density PE (LDPE) film to 91-93 cents/lb DEL; and high density PE (HDPE) blow moulding prices to 83-85 cents/lb DEL, for small volume buyers, as assessed by ICIS.

Spot US ethylene has dropped at least 10% in November as more crackers have come back online from outages. Costs for ethane, the US ethylene feedstock, have dropped to the lowest level in almost 13 years. Spot ethylene has traded this week at 51.25-55 cents/lb, falling from 59 cents/lb at the end of October.

There had been talk of a few holdouts for a smaller reduction, but a distributor said all of the major producers had agreed to the three-cent reduction after word spread that ExxonMobil was reducing by that number.

“When the Tiger roars,” the distributor said, referring to ExxonMobil, “then everybody follows.”

Major North American PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total, NOVA Chemicals and Formosa Plastics.