Market and product

US July polyethylene (PE) contracts were flat for the second consecutive month, sources said on Thursday.

This marked the fourth rollover this year, but contract prices remain 5 cents/lb above January levels.

Prices for high density (HDPE) blow moulding remained at 74-76 cents/lb ($1,631-1,675/tonne).

The flat contract settlement also confirmed the historical trend of a flat July. PE contracts have showed no change in that month during each of the past six years.

Industry data showed a slight gain in June sales over May while PE inventory continued to rise, which market sources attributed to a few producers stockpiling material for upcoming turnarounds.

A few 3 cent/lb increases have been nominated for August, but not every producer has issued an initiative.

A buyer said the small hike is a holdover from March, when a proposed increase was cut in half by a late-month revision. Some producers have just moved the 3 cent/lb hike forward each month since then.

“They are going to try hard to get it before all of the new capacity starts,” a buyer said on Thursday.

There is also an historical tilt in August toward flat PE contracts, with a rollover in four of the past six Augusts, with a drop in 2015 and an increase in 2012.

The new capacity comes from four world-scale PE plants owned by ExxonMobil, Dow Chemical, CP Chem and INEOS/Sasol that are set to start up before the end of this year.

A veteran PE watcher said the impending new capacity plus the high inventory have undermined the chances for a small increase in August.

Major producers include Chevron Phillips Chemical, Celanese, Dow Chemical, DuPont, ExxonMobil, Formosa Plastics USA, INEOS, LyondellBasell, NOVA Chemicals, Total and Westlake. - Source: ICIS -