US PE drops 5 cents/lb in February, 4th straight monthly decline

HOUSTON (ICIS)–US polyethylene (PE) February contracts fell 5 cents/lb on lower feedstocks and weakened demand, sources said on Thursday.

It was the fourth straight monthly decline. PE contract prices have dropped 3-5 cents/lb each month beginning in November 2014, responding to the plunge in oil prices and the corresponding impact on chemical feedstocks.

The move cut prices for linear low density PE (LLDPE) butene film to 70-72 cents/lb ($1,543-1,587/tonne) DEL (delivered), from 75-77 cents/lb previously; low density PE (LDPE) film to 79-81 from 84-86 cents/lb DEL; and high density PE (HDPE) blow moulding to 70-72 cents/lb DEL from 75-77 cents/lb DEL, for small volume buyers.

Since October 2014, US PE contracts have been reduced by 16 cents/lb. But that drop has been less than the fall in major feedstock US ethylene, where contracts have dropped 19.25 cents/lb and spot has dropped by almost 24 cents/lb in the same period.

Such a disconnect exists because many PE producers also make their own ethylene and are somewhat insulated from price fluctuations in that raw material.

The February drop could be the last in the string, though. Dow Chemical’s announcement earlier this month of a 5 cent/lb increase in mid-March on all PE resins would nullify the latest cut.

Major US PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake Chemical, INEOS, Total, Nova Chemicals and Formosa Plastics.