US August PE rolls, hikes out for September, October

01 September 2016 20:49 Source:ICIS News

HOUSTON (ICIS)--US polyethylene (PE) contracts rolled over for August, sources said on Thursday, marking the fourth month in a row of flat pricing.

Most sources say August probably marks the end of the rollover streak, because a number of PE producers have issued price increases for September and a few have some out for October as well.

“Things are looking pretty strong at this point in time” for September, a producer said.

At least five producers, in separate releases, have announced plans to raise contract prices by 5 cents/lb on 1 September.

Two producers – LyondellBasell and Dow Chemical – this week issued PE increases for October as well, separately planning to raise prices on all grades by 4 cents/lb on 1 October.

Both announcements noted that the October hike would be “in addition to” previously announced increases, so if customers accept all of the September hike and all in October it would raise the monthly contract by 9 cents/lb for the two months.

Many sources expect PE customers to accept most or all of the September increase, with the prime mover the spot price for major feedstock ethylene, which has jumped 60% since early July.

Besides the move up in ethylene, some other issues support a move higher for PE contracts in September.

Oil prices, PE export prices and some production issues have tightened supply. Plus, a handful of shrink-film producers said earlier this month they would raise prices because of PE producer hikes for September.

Buyers have been expecting PE prices to drop at some point this year because of increased supply in the North American market from the ramp-up of new production at Mexico’s Ethylene XXI, operated by Braskem Idesa, and expansion projects in the US and Canada. 

But the impact from the new plant in Mexico has not really registered in the US yet, according to PE sources.

Major producers include Chevron Phillips, Dow, DuPont, ExxonMobil, Formosa Plastics USA, Ineos Olefins and Polymers, LyondellBasell, Total USA and Westlake Petrochemicals.

By Lane Kelley