US PE January contracts settle flat

24 January 2014 16:15 Source:ICIS News

HOUSTON (ICIS)--January contracts in the US polyethylene (PE) market were assessed as flat on Friday, after higher feedstock prices and low producer inventory levels following a record month of PE exports in December left buyers with little hope for a price decrease.

Producers had not sought any increases in January, so the only question that remained was whether prices would fall, as buyers had been hoping for the past few months. However, with PE producers exporting more than 900m lb (408,000 tonnes) of PE in December, their inventories were depleted, leaving buyers with little leverage to ask for a decrease, sources said.

Any hope for a decrease “kind of went by the wayside,” according to one producer, who added, “December took care of any excess inventory, and we have started the year fresh.”

The rollover has resulted in a fourth month of flat pricing in the PE market. However, with no price reductions in the PE market in all of 2013, prices remain more than 10% higher than they were in January 2013.

Now, market participants have turned their attention to February price increases of 4 cents/lb announced by most producers.

Export prices in some cases are up by 2-3 cents/lb, which some sources have said supports producers’ push for an increase. A producer also pointed to higher ethylene and ethane prices, which it said helps to justify an increase.

However, some buyers said they believe if producers get anything, it will not be the full 4 cents/lb they are seeking, arguing that producer margins are substantial, and supply is fairly balanced.

“They may be able to get a small increase out of it, but not 4 cents/lb,” said one buyer.

Following the January settlement, prices for linear low density PE (LLDPE) butene film were at 79-81 cents/lb DEL (delivered), 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.

Major North American PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total, NOVA Chemicals and Formosa Plastics.

By Michelle Klump