The push for further US polyethylene contract decreases in September picked up more momentum Tuesday and Wednesday as additional producers began informing customers they would cut prices for the second straight month, market sources said.
Formosa Plastics and Nova Chemical both plan to cut September polyethylene contract prices by 4 cents/lb, joining ExxonMobil Chemical, which had previously announced a decrease of the same amount, multiple market sources said late Tuesday. Two other producers were heard matching the decrease Wednesday, according to market sources, but confirmation was not immediately available. Others were yet to commit to a decrease, but were telling customers they would be competitive on price movements by the end of the month, sources said.
“They’re all going to be down at some point,” a distributor source said, echoing sentiments of multiple buyer and producer sources.
A 4 cents/lb decrease would be in line with projections by some market participants that an additional 3-5 cents/lb decrease could be warranted for September contracts. August contracts fell 5 cents/lb, erasing an increase of the same amount that was implemented in May.
Lower feedstock costs, weaker domestic sales and declining global pricing are among factors market participants have pointed to as reasons supporting a decrease.
Some market sources suggested a larger decrease could still be possible before the end of the month. Producers agreeing to lower prices early in the month is rare, sources noted. US polyethylene contracts typically settle later in a month, with prices applying retroactively.
August high density polyethylene contracts were assessed for blowmolding at 70-71 cents/lb ($1,543-$1,565/mt) delivered-rail car basis; at 70-71 cents/lb ($1,543-$1,565/mt) for injection grade; and at 73-74 cents/lb ($1,609-$1,631/mt) for HMW film.
August domestic low density polyethylene contracts were assessed at 79-80 cents/lb ($1,742-$1,763/mt) for delivered rail cars, while linear-low density butene contracts were assessed at 66-67 cents/lb ($1,455-$1,477/mt) for delivered rail cars.
