HOUSTON (ICIS)--US polyethylene (PE) contracts for May appeared to be heading for a price cut on Friday as two producers were heard to be lowering prices by 3 cents/lb ($66/tonne).
Formosa Plastics USA confirmed the reduction, according to a source close to the producer.
That source said Formosa’s cut stemmed from a move by another producer, NOVA Chemicals, which was also said to be cutting prices by a similar amount.
A call to NOVA was not immediately returned.
The moves came barely a day after Dow Chemical issued a letter telling customers that its 3 cent/lb increase for May is being delayed until June, according to a letter sent by the company.
Dow’s letter marked the third consecutive delay of the hike. The producer’s 18 May letter did not give a reason for the delay.
Buyers and other PE sources say there is little defense for such an increase, with global PE contracts falling and US export prices slipping in the past month.
Another reason undercutting the proposed hike came earlier this month when industry data showed PE inventory approached a two-year high in April.
PE contracts rolled over in January, rose 5 cents/lb ($110/tonne) in February and rose by 3 cents/lb in March.
High density PE (HDPE) blow moulding is currently assessed at 77-79 cents/lb.
Major US PE producers include Chevron Phillips Chemical, Dow Chemical, ExxonMobil, Formosa Plastics, LyondellBasell, NOVA Chemicals, Total and Westlake.
Image: PE is used to make plastic bags. Source: Dinendra Haria/REX/Shutterstock