PE Market Weakness Spreads To US

Business, China, Company Strategy, Economics, Olefins, Polyolefins, US

By Malini Hariharan

After Europe, the US polyethylene (PE) market has started showing increasing signs of weakness. Spot offers have rapidly fallen putting downward pressure on June contracts that are currently under negotiation. Producers may have no choice but to settle at lower levels as exports to Asia is no longer a viable option.

Spot offers for some PE grades in the US are nearly 19% below May contract prices, reports ICIS news.

According to one buyer, a producer has nominated a 6 cent/lb reduction in low-density polyethylene (LDPE) June contract price and 3 cent/lb drop in linear-low density polyethylene (LLDPE) and high-density polyethylene (HDPE) prices. But even this is likely to be unacceptable to buyers.

Contract prices in May were rolled over from April with LLDPE at 77-81 cents/lb as against current spot offers of 63-65 cents/lb.

With crude oil prices falling last week after the IEA’s decision to release 60m bbls of oil from strategic reserves and US ethylene for July dropping 11%, PE buyers will be looking for to maximise price reductions. The outlook for US ethylene also remains soft with supply set to increase once LyondellBasell restarts a cracker in Texas after a 2-month maintenance shutdown.

Meanwhile competitive exports from Asia have reached as far as Mexico, another blow to US producers. Pemex, the Mexican producer, has been forced to implement two price reductions for LDPE and LLDPE in June in response to lower priced Asian offers.

And with Chinese buying continuing to remain weak for reasons highlighted by the blog in earlier posts, exports to the West are likely to be a steady feature in the coming weeks.

PREVIOUS POST

European Markets Weaken Further

27/06/2011

By John Richardson THE dreadful state of European polyolefin markets became even...

Learn more
NEXT POST

Boom, Gloom and the New Normal - Chapter 2 Published Today

28/06/2011

Chapter 2 of Boom, Gloom and the New Normal is published today. In a completely ...

Learn more
More posts
BASF’s shocking Q2 results should have been no shock at all
09/07/2019

y John Richardson NOBODY should be surprised by the BASF results for Q1 2019 where, on a year-on-yea...

Read
Multiple trade disputes and the risks for the US PE industry
03/07/2019

By John Richardson FALLING out with a trading partner as big as China is problematic enough. But the...

Read
China PE overstocking at nearly a million tonnes as demand weakens, competition intensifies
02/07/2019

By John Richardson MEASURING petrochemicals and polymer inventory levels in China with any reasonabl...

Read
China petrochemicals recovery on G20 trade war progress will be shortlived
30/06/2019

By John Richardson China petrochemical and polymer price spreads over naphtha feedstock costs will r...

Read
President Trump’s Vietnam warning threatens more polyethylene disruptions
27/06/2019

Just to stress  that, as always, what follows are my own personal views and not those of ICIS By Jo...

Read
US LLDPE imports and the impact on European petrochemicals
26/06/2019

  By John Richardson EUROPEAN linear-low density polyethylene (LLDPE) markets have yet to feel ...

Read
Southeast Asia PE spreads further underline weak demand, but trade talks promise rebound
25/06/2019

By John Richardson THE GOOD news today is that the US and China have agreed to resume trade talks. P...

Read
Global polyethylene: Supply is not the problem, it is demand
24/06/2019

By John Richardson WHEN people talk about supply it is very often because it is much easier to quant...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more