PE price hike proposal by US producers could get derailed

18-Nov-09

Despite low levels of inventories with polyethylene producers in USA, price hike initiatives for November could get disrupted on seasonally weak demand in the domestic markets as per ICIS. Surprisingly, export demand continues to be strong. A proposal to increase prices by US$88-110/ton for November follows a similar increase implemented in September-October. Current dynamics with rising feedstock costs and strong export demand resembles those in September. The way markets were viewed conventionally has changed, and producers have exhibited sufficient market discipline to implement price increases even without strong domestic demand. Buyers in Asia were paying more for resin than large US buyers, effectively helping to bid up domestic prices. High density PE blow moulding for export in bags was 47-48 cents/lb FOB (free on board) US Gulf, according to ICIS Pricing. Domestic bulk deliveries to small-volume customers were at 54-57 cents/lb, with the November increases still pending. Inventories of film grade PE were the lowest of all, with strong demand noted in that sector. Export prices for LLDPE and LDPE could increase this week because of low inventories.