LyondellBasell is seeking a total price increase of 35¢/lb for US polyethylene (PE) contracts over the next three months signaling that the company believes higher prices have some staying power.
In an 18 March letter, LyondellBasell informed customers that in addition to the 10¢/lb increase it is planning for March contracts, it was revising its earlier 10¢/lb increase for April contracts higher to 15¢/lb and adding another 10¢/lb increase for May contracts.
All other producers have announced a 10¢/lb increase for March, which one market participant described as "a slam dunk". Other producers have announced additional increases of between 10-15¢/lb for April. It was not immediately clear whether other producers have also announced May price increases.
"If you are a supplier, you want to aim high because you don't want to cap your ability to be able to raise prices when you need to," said a US PE distributor. "Things are going crazy, and they want to make sure they can implement whatever they need."
The price hikes stem from global polymer supply disruptions and feedstock disruptions in the Middle East and throughout Asia due to the US-Israel war on Iran, which is creating new demand for resin out of the US.
Buyers are growing increasingly concerned about the price increase announcements, fearing that the higher prices may stick for some time.
"A big chunk of these increases is probably going to go in," said one US PE buyer. "It is freaking chaos."
The increases are making it difficult for buyers to plan because it is hard to gauge at what price demand destruction will take place.
"We need to know how to plan," the buyer said. "This doesn't really help for longer-term business."
For now, some buyers are trying to purchase extra cars to get ahead of the price increases, but supply is very tight, and there is limited availability.
