US PE contract prices in September up 5 cents/lb. across all grades, driven by strong seasonal demand and several supply disruptions that particularly affected availability of HDPE; contract PE prices likely to rollover into October

, October 23, 2013 () – Contract prices for US polyethylene (PE) increased in Sep 2013 by 5 cents/lb across all grades due to strong seasonal demand combined with several supply disruptions, affecting particularly the availability of high density PE (HDPE). The disruptions in HDPE supply were prompted by force majeure declarations made by LyondelBasell at its plant in Matagorda, TX, and by Formosa Plastics at its plant in Point Comfort, TX. The two force majeure declarations coincided with the pipeline problems of ExxonMobil that has hindered the company to move ethylene to its largest HDPE plant in Baton Rouge, LA. LyondellBasell announced around 12 Sep 2013 that its 695,000 tonnes/y HDPE plant in Matagorda was experiencing mechanical problems, justifying a force majeure. Later on, Formosa announced force majeure on HDPE products from its 650,000 tonne/year plant in Point Comfort. It followed what the company has described as an incident that sent five people to the hospital. The ethylene pipeline problems of ExxonMobil at its 900,000 tonnes/y Baton Rouge plant were originally disclosed in late Aug 2013. At that time, the company announced product allocation. It was still continuing as of 1 Oct 2013, with ExxonMobil putting pressure for early buying projections. Dow and INEOS were originally seeking additional 5 cents/lb increase for all PE grades in Oct 2013. However, Dow has pushed back its increase to Nov 2013. After Dow's announcements, contract prices for PE in Oct 2013 appear set for a rollover from Sep 2013. The companies are likely to keep the 5 cent/lb increase from the Sep 2013 contracts but not increase further. After the Sep 2013 settlement, low linear density PE (LLDPE) butane film prices were around 79-81 cents/lb DEL, low density PE (LDPE) film prices were around 88-90 cents/lb DEL and blow moulding HDPE prices were around 79-81 cents/lb DEL, for small volume buyers. A graph entitled US polyethylene prices shows contract prices (cents/lb) for bulk blow moulding HDPE, linear grade LDPE and butane film LLDPE DEL US Gulf. Original Source: ICIS Chemical Business, http://www.icis.com/, Copyright Reed Business Information Limited 2013.

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