PE Spot Prices Down; More Contract Price Reductions Likely

Though not directly confirmed, industry sources indicate that at least one other PE supplier, Westlake Chemicals, Houston, is offering a 3ȼ/lb November contract price reduction, joining Nova Chemicals, Calgary, Alberta (U.S. office in Moon Township, Penn.), in putting into effect the first price reduction in two years.

 

As previously reported, since the Nov. 2012, 2ȼ/lb decrease, PE prices have moved up 21ȼ/lb—a period during which PE suppliers have enjoyed hefty profit margins. Industry sources, such as Mike Burns, v.p. for PE at purchasing consultants Resin Technology, Inc., has stressed that North American PE suppliers will need to address the global price that is set by the price of oil and make downward adjustments, citing the quickly changed PE market dynamics that surfaced from the unexpected drop in oil and naphtha prices,

 

Meanwhile, Michael Greenberg, CEO of The Plastics Exchange, reports that the spot PE market has been pressured as availability for most grades swelled. “Asking prices in the Houston market continue to fall as suppliers chase the elusive export order. While much of this surplus material will move offshore, noting such a large delta between Houston and domestic prices, some resin will surely stick around the U.S.” Greenberg, for one, thinks that other PE suppliers will come through with domestic contract price reductions before long, in view of changing market fundamentals and the very strong likelihood of continued weakness.

 

Want to find or compare materials data for different resins, grades, or suppliers? Check out Plastic Technology’s Plaspec Global materials database.