HOUSTON (ICIS)--US June contracts for polyethylene (PE) were assessed at a rollover from May as higher crude-oil costs and supply concerns during the Atlantic hurricane season maintained a price floor.
Price increase initiatives of 3 cents/lb ($66/tonne) remained on the table for June but were not implemented in most cases.
There had been expectations of lower prices given the strong run-up during the second half of 2017 following Hurricane Harvey. Also, producers were starting up new PE plants in the US in the second half of last year.
Spot prices for feedstock ethylene also remain at multi-year lows on long supplies, although the length is partly due to slower than expected growth in production rates at US PE plants.
Higher crude oil prices have helped to keep a floor on PE prices as WTI futures are up more than $25/bbl compared with the same period of the past year, supporting higher prices in global PE markets.
Concerns about the possibility of supply disruptions stemming from the Atlantic hurricane season has also encouraged converters to keep more material in inventory, providing additional support to PE prices.
Converters are complaining about margin compression as they had budgeted for significantly lower raw material costs.
ICIS assessed June contracts for LLDPE butene film at 61-67 cents/lb ($1,345-1,477/tonne), high density polyethylene (HDPE) blow moulding at 64-68 cents/lb and low density polyethylene (LDPE) liner grade at 69-73 cents/lb, all on a delivered US in bulk basis.
Major US producers of PE include Chevron Phillips Chemical (CP Chem), DowDuPont, LyondellBasell, ExxonMobil, Formosa, INEOS, Total Petrochemicals and Westlake.
Photo above shows pipe made out of PE. Photo by Al Greenwood