Polyethylene buyers in USA anticipate further price reductions in Q1-2015 amid the growing disparity between US and international prices, caused mostly by plunging naphtha costs, as per Argusmedia.com. After two years without any reduction in US polyethylene prices, US producers shed 7¢/lb in the last two months of 2014, erasing any gains for the year and putting end-of-year prices on par with December 2013 levels. US producers had held onto pricing power for much of the year because of tight supplies following by a number of planned and unplanned outages.
However, as the drop in crude and naphtha costs drove international polyethylene prices lower, US suppliers were forced to react to the prospect of long-term demand destruction caused by imported resin and finished goods. Even with the 7¢/lb price drop over November and December, the disparity with international prices has grown wider. In August, before crude prices began to plunge, the spread between US and Asia prices was around 46¢/lb. In December, after prices fell, the disparity had grown to 51.7¢/lb.
That gap suggests there is more room for US prices to fall in early 2015. Otherwise US polyethylene producers run the risk of losing domestic demand, which accounts for about 80pc of their business. An oversupply of ethylene feedstock and growing polyethylene inventories are also supporting additional polyethylene price cuts. In November, producers socked away an extra 163mn lbs of resin, putting supplier inventory levels heading into December at more than 3.6bn lbs, the highest point of the year, according to data from the ACC Plastics Industry Producers' Statistics Group, as compiled by Veris Consulting.With export opportunities limited by high US prices and weak global demand, participants expect the market to be well supplied in January, as buyers' appetites return.
05-Jan-15 
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