More 4 cent/lb February price hikes proposed for US PE

09 January 2014 19:27 Source:ICIS News

HOUSTON (ICIS)--At least five US polyethylene (PE) producers this week announced separate 4 cents/lb price increase announcements for February contracts, sources said on Thursday.

The announcements made by Chevron Phillips Chemical, Formosa Plastics, ExxonMobil, Total Petrochemicals and Westlake call for a 4 cent/lb increase for all grades of PE, effective on 1 February, according to copies of customer letters obtained by ICIS.

The announcements come after similar announcements made last week by Dow Chemical and LyondellBasell for separate 4 cent/lb increases for 1 February.

None of the announcements offer reasons for the proposed increases. However, sources said they are probably based on expectations that feedstock ethylene will be tight in the first few months of the year, ahead of planned cracker maintenance turnarounds scheduled for April.

This week, US December ethylene contracts reached an initial settlement up by 4.3%, as spot ethylene prices reached a six-month high.

Sources said they expect the ethylene price to continue to rise in the coming months because of supply tightness, which will in turn, cause supply tightness in the US PE market.

Market participants have said it is too early to talk about February prices. However, some suggested the recent price increase announcements are intended to support flat pricing in January.

Producers are targeting a price rollover in January after a flat settlement in December, sources said. Some buyers are hoping that prices will fall in January, based on weak demand.

Current assessed prices for linear low-density PE (LLDPE) butene film were at 79-81 cents/lb DEL (delivered), low-density PE (LDPE) film prices were at 88-90 cents/lb DEL, and high-density PE (HDPE) blow moulding prices were at 79-81 cents/lb DEL, for small volume buyers, as assessed by ICIS.

By Michelle Klump