US July PE contracts settle flat for second consecutive month

HOUSTON (ICIS)–US July polyethylene (PE) contracts were flat for the second consecutive month, sources said on Thursday.

This marked the fourth rollover this year, but contract prices remain 5 cents/lb above January levels.

Prices for high density (HDPE) blow moulding remained at 74-76 cents/lb ($1,631-1,675/tonne).

The flat contract settlement also confirmed the historical trend of a flat July. PE contracts have showed no change in that month during each of the past six years.

Industry data showed a slight gain in June sales over May while PE inventory continued to rise, which market sources attributed to a few producers stockpiling material for upcoming turnarounds.

A few 3 cent/lb increases have been nominated for August, but not every producer has issued an initiative.

A buyer said the small hike is a holdover from March, when a proposed increase was cut in half by a late-month revision. Some producers have just moved the 3 cent/lb hike forward each month since then.

“They are going to try hard to get it before all of the new capacity starts,” a buyer said on Thursday.

There is also an historical tilt in August toward flat PE contracts, with a rollover in four of the past six Augusts, with a drop in 2015 and an increase in 2012.

The new capacity comes from four world-scale PE plants owned by ExxonMobil, Dow Chemical, CP Chem and INEOS/Sasol that are set to start up before the end of this year.

A veteran PE watcher said the impending new capacity plus the high inventory have undermined the chances for a small increase in August.

Major producers include Chevron Phillips Chemical, Celanese, Dow Chemical, DuPont, ExxonMobil, Formosa Plastics USA, INEOS, LyondellBasell, NOVA Chemicals, Total and Westlake.