Updated to mid-November 2009
Asian market review by Chow Bee Lin, ICIS pricing
Asian linear low density polyethylene (LLDPE) and high density polyethylene (HDPE) film/HDPE blow grades prices fell by 0.6-4.3% on average from around $1,160-1,320/tonne CFR (cost and freight) China/SE Asia (southeast Asia) in mid-August to around $1,120-1,320/tonne CFR China/SE Asia in mid-November.
Prices fell through most of September as importers retreated to the sidelines, in fear that new capacities in China and the Middle East would weigh down on prices.
Low density polyethylene (LDPE) prices in China and southeast Asia also fell through most of September, but rebounded sharply in early November due to tight supply.
European market review by Linda Naylor, ICIS pricing
Prices of HDPE in Europe have moved little overall in the past three months. Production was cut back at both the cracker and polymer units, and there were few imports to disturb the European market significantly. Production was cut back as demand was weak and the current supply/demand balance was considered to be fine.
Asian HDPE prices had not risen in line with LDPE and LLDPE, and HDPE availability was better in Europe as a result. The new Middle Eastern capacities had not yet made the splash that many observers thought they would by the end of 2009 and some producers were talking of price hikes for December.
Many sources now no longer expected significant imported volumes from new Middle Eastern capacities before well into 2010.
US market review by David Barry, ICIS pricing
US polyethylene (PE) prices for small-volume bulk consumers ranged from the mid-50s to the low-60s cents/lb at the start of November. Producers had two price hike initiatives on the table; a November increase announced at 4-5 cents/lb and a December increase at 3 cents/lb. The Q4 price hike initiatives come on the heels of a 4 cents/lb price hike that was implemented across most of the market in September.
The September price increases came as a surprise to many domestic resin converters, who saw no significant improvement in local demand to support a price hike. Resin exports to Asia once again provided the impetus for US producers to raise domestic prices. Also, feedstock costs were creeping during the quarter, requiring price hikes downstream, PE producers said.
The continuation of strong demand for PE exports from the US to Asia has surprised producers, and a big question moving forward is how long will that demand last. As new capacity in the Middle East and China starts up and operates more reliably, traders say they expect the deep-sea market for US PE will diminish, which could shift the pricing momentum back toward US resin consumers.
Latin American market review by George Martin, ICIS pricing
During the August-November period, PE prices in Latin America continued to recover at a steady pace, emulating the behaviour of crude oil and feedstock ethylene prices.
The recovery pace was faster in Brazil than in any other Latin country, but it must be remembered that Brazilian prices include a tax called PIS/Cofins that adds about 9.5% on average to all prices.
Colombian production stabilised in this period after experiencing technical problems in the LDPE units. Currency fluctuations were a large source of price volatility in Colombia, where the local producer made weekly adjustments to PE prices to remain competitive with imports.
Chile’s PE prices were the steadiest in the region, thanks to low import tariffs and alternatives from different regions competing to ship product there.
Although PE prices showed some gains in Mexico, prices in this country were as low as those of Chile, and at times lower, to prevent a flood of US imports entering the country duty-free due to the North America Free Trade Agreement (NAFTA).
Venezuelan PE prices did not change at all throughout 2009 due to a fixed exchange rate with the US dollar and long inventories of high-priced material in the hands of the local producer. There were shortages of some grades like LLDPE butene for film applications, but other grades were in good supply. Venezuelan transformers continued to pay the highest prices in the continent.
With the exception of Venezuela, the above-described scenarios depicted the behaviour of LDPE in the region, but apply also to LLDPE and HDPE grades.
Prices were likely to stay on a steady path during November, but there was uncertainty about December price direction.