LLDPE Outlook

According to Terry Bourgeois, Plastic Market Monthly Editor for Townsend Solutions, producers are pushing their previously announced increases for December PE to January, which range between 5.0 and 7.0 cpp. Sentiment differs depending on who you talk with, but so far in early January producers appear firmly intent on raising contract prices in January in order to im-prove margins to support higher operating rates. How-ever, with some producers asking 5.0 cents rather than 7.0 cents, sources say it is likely that the maximum of any increase would be the nickel. Buyers will be pushing hard to hold prices flat if demand remains weak and if export prices do not increase but still recognize prices can and will move higher on producer’s resolve alone.

Sources say producers are attempting to raise spot domestic and export prices, but market chatter indicates activity in early January has been limited with very few confirmed deals as traders are just trying to determine workable price levels as opposed to making a sale. Producers were heard limiting offers anyway as many say they won’t have any product to offer until after mid-month and the few offers out there are priced 1.0-3.0 cpp higher from December levels.

In production news, Shell was heard to have restarted all three of its PE units following a turnaround in December. Sources say some units in the Midwest were heard running at reduced rates due to feedstock limitations and one HDPE plant in La Porte, Texas was heard running at lower rates due to operational issues. No other major problems were reported.

LLDPE spot export prices during the first week in January were holding steady with levels seen at the end of December. According to market sources, butene grades were heard trading between $794 and $816/mt FAS Houston while hexene grades were talked between $816 and $838/mt FAS Houston and metallocene were heard between $904 and 926/mt FAS Houston. The FAS pricing includes an estimated 4.5 cpp to cover packaging and transit to port costs.

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