The push to lower North American polyethylene contract prices in November continued to build steam Tuesday, with market sources saying multiple producers had agreed to a 3-cent/lb ($66/mt) decrease.
Contracts had not been finalized marketwide Tuesday afternoon, but sources said as many as four major producers were heard finalizing November contracts at lower price levels.
Domestic polyethylene contract prices have not recorded a month-on-month decrease since November 2012, but lower feedstock costs coupled with steep declines in international polymer pricing — driven in part by lackluster demand and weaker crude and naphtha — were pressuring domestic values, sources said.
Talk of a possible decrease gained traction midmonth after a North American producer was heard agreeing to a 3-cent/lb decrease. Multiple market participants identified the producer as Nova Chemicals, although confirmation from the company could not be obtained.
At the time, sources said that while lower orders from well-stocked buyers could impact demand, achieving a decrease would likely take large end users shifting — or looking to shift — production away from the US to Asia, creating a lost sales opportunity that the domestic market wouldn’t replace.
On Monday, buyers got a major boost after a second major producer was heard supporting a 3-cent/lb ($66/mt) decrease, sources said. Two sources with US-based distributors said the second producer on board was ExxonMobil Chemical, although confirmation from the company was unavailable by time of publication. ExxonMobil does not generally comment on pricing matters.
Market participants were quick to label these as initial settlements and stress that they did not amount to a marketwide agreement, as no other producers were heard following. It was also unclear if the decrease applied to all grades of PE, although that was likely the case, sources said.
Sources said Tuesday that two other producers appeared to be on board with the 3 cents/lb decrease, and two others were holding internal meetings Tuesday to discuss November contract prices.
PE contracts last settled at a rollover for October, with low-density polyethylene assessed by Platts at 95-96 cents/lb ($2,094-2,116/mt) delivered-railcar basis, and linear low-density polyethylene contracts assessed at 82-83 cents/lb($1,808-1,830/mt) for delivered railcars.
October high-density polyethylene contracts were assessed for blowmolding at 86-87 cents/lb ($1,896-1,918/mt) delivered-railcar basis; at 86-87 cents/lb ($1,896-1,918/mt) for injection; and at 89-90 cents/lb ($1,962-1,984/mt) for HMW film.
Domestic PE contract prices rose 21-23 cents/lb since falling 2 cents/lb in November 2012, with producers pointing to strong domestic demand and tight supplies throughout the run-up.
Contract prices for feedstock ethylene, however, fell 4 cents in October to 50.50 cents/lb, when spot averaged just over 63.50 cents/lb, per Platts data. Spot ethylene for November has averaged just under 53.60 cents/lb, fueling talk that such downward movement could translate into a decrease of 4-5 cents for November contracts, ethylene market sources said.
Spot export pricing for US-origin PE has also dipped, pressured by falling prices in Asia, Europe and Latin America, sources said.
Spot HDPE blowmolding for export was assessed Monday at $1,566-$1,588/mt FAS Houston, down $99 since October 1. Spot LDPE for export closed Monday at $1,621-$1,643, down $132 since October 1, per Platts data.
– Platts.com
