August US domestic polyethylene contracts are poised to fall by 5 cents/lb, with multiple producers heard agreeing to drop prices by that level, market sources said.
Most US producers had previously agreed to 3 cents/lb decreases earlier in the month, but several factors — including lower feedstock costs, weaker domestic sales and declining global pricing — had continued to put pressure on producers to concede a further drop, sources said Tuesday and Wednesday.
Earlier this month, Formosa Plastics, told customers they planned to lower contracts by 5 cents/lb, sources said, prompting market talk at the time that other producers would likely have to match that move. At least three other producers have since moved down, sources said Tuesday, with growing expectations that others would soon follow suit. Producer confirmation was not immediately available.
July HDPE contracts were assessed for blowmolding at 75-76 cents/lb ($1,653-1,675/mt) delivered-rail car basis; at 75-76 cents/lb ($1,653-1,675/mt) for injection grade; and at 78-79 cents/lb ($1,720-1,742/mt) for HMW film.
July domestic LDPE contracts were assessed at 84-85 cents/lb ($1,852-$1,874/mt), while LLDPE butene contracts were assessed at 71-72 cents/lb ($1,565-$1,587/mt).
A 5-cent drop would erase an increase of the same amount that was implemented in May.
Further decreases remain likely over the next two months, sources said, with suggestion by some in the market that an additional 4-5 cents/lb drop could be warranted by the end of October.
With global oil prices moving lower of late, there was renewed threat of lost finished-goods manufacturing from the US to Asia if the gap between the two regions continues to widen, sources said. Asian PE prices are more strongly influenced by oil, as the majority of its ethylene feedstock is produced from naphtha.
