US August contracts for polyethylene (PE) were assessed 1 cent/lb ($22/tonne) lower from July on persistent supply length and weaker global demand.
The US PE market remains well supplied as the country is in the midst of a massive investment wave that has already resulted in the addition of over 4.7m tonnes/year of new capacity since 2017.
Domestic demand for PE has been steady, although disappointing demand growth from overseas markets created logistics problems for US producers, who export a significant percentage of their overall PE production.
Overseas demand has been blunted by ongoing trade tensions between the US and China, as well as signals of a possible economic recession around the world, which have resulted in lower raw material consumption in a number of major industrial segments.
Warehouses and bagging facilities along the US Gulf are operating at close to full capacity and have limited space to accommodate new cargoes.
While material in bulk railcars is readily available, there are delays of between two and three weeks to bag cargoes for export.
Weakness in overseas demand has also brought down US export prices, causing domestic buyers to push for decreases on their contract prices as spreads between spot and contract values widened for much of the first half of the year. Domestic spot cargoes were quoted this week in the high 30s to low 40s on a cents/lb basis in bulk railcars.
Meanwhile, contract prices as assessed by ICIS are in the high 40s to mid 50s. Spot export prices are lower still and are being quoted in the mid-to-high 30s free on board (FOB) US Gulf basis.
ICIS assessed August contracts for linear low density polyethylene (LLDPE) butene film at 48-54 cents/lb, high density polyethylene (HDPE) blow moulding at 51-55 cents/lb and low density polyethylene (LDPE) hi-clarity film grade at 55-59 cents/lb, all on a delivered US in bulk basis.