Formosa declares force majeure on US LLDPE, HMW PE

HOUSTON (ICIS)–Formosa Plastics USA has declared force majeure on all of its linear low density polyethylene (LLDPE) and Formolene bimodal high molecular weight (HMW) polyethylene (PE) products, it said in a Wednesday customer letter.

According to the letter, recent evaluations of the company’s olefins 1 unit, which experienced an unexpected shutdown in December, is likely to require an extended time to recover and is currently projected to restart in the second half of February.

Formosa has production capacities of 693,000 tonnes/year of high density polyethylene (HDPE) and 365,000 tonnes/year of LLDPE at its Point Comfort, Texas location.

US PE supply has been tight recently, which has encouraged sellers to push for higher prices. Price increase initiatives have emerged calling for price hikes of 4 cents/lb ($88/tonne) for February and another 3 cents/lb for March.

Buyers may offer some resistance to higher prices given the significant run-up in prices which took place in months after Hurricane Harvey. Buyers had been anticipating that they would be able to pare back most of the post-Harvey increases during the first quarter, although unexpected tight supplies in the first quarter is likely to help keep at least some of the post-Harvey increases in place.

ICIS assessed January contracts for LLDPE butene (C4) film at 80-82 cents/lb, high density polyethylene (HDPE) blow moulding at 80-82 cents/lb and low density polyethylene (LDPE) liner grade at 88-90 cents/lb, all on a delivered US in bulk basis.

Major US producers of PE include Chevron Phillips Chemical (CP Chem), DowDupont, LyondellBasell, ExxonMobil, Formosa, INEOS, Total Petrochemicals and Westlake.