US polyethylene (PE) export prices fell sharply for the 10th consecutive week to 26 June, taking prices for most grades almost back to pre-Iran war levels, as producers offered end-of-quarter sales to help clear out inventories.
Export prices fell by between 4.5¢/lb and 11.5¢/lb on an fas Houston basis, depending upon grade, for the week ended 26 June. Prices were in some cases in a wide range, with not all producers offering at the lowest levels.
"Producers have found some large traders to help them clear inventories," said one US PE trader. "Not all manufacturers are participating."
Prices started declining at the end of April, when the global market was pressured by low-priced resin from China and weak global demand. With this week's decline, prices are near, or in the case of high density polyethylene (HDPE) high molecular weight film, actually lower than on 27 February, before the US war with Iran began.
HDPE high molecular weight film prices were assessed at 39¢/lb on 26 June, 4.5¢/lb lower than levels on 27 February. Other grades, such as HDPE blow molding, HDPE injection and linear low density polyethylene (LLDPE) butene are between 3.5¢/lb-6.5¢/lb higher than levels on 27 February. Low density polyethylene (LDPE) prices are declining also, but have held a premium to other grades, with prices still 11¢/lb higher than pre-war levels.
Last week, traders said some of the lowest prices were limited to sales in China. But this week, traders said there are no restrictions on where the product can be sold, as long as it is outside of the North American market.
"There are no restrictions. The producers are asking us to take more," said another US PE trader. "They are feeling some pressure."
The pressure has come from a number of factors, including: low prices out of China which pressured the global market lower, high producer inventories in the US and Canada, weak global demand, and concerns about volumes that will come out of the Middle East once the strait of Hormuz fully opens.
Once producers work down their inventories, some sources said it is possible that prices could rebound slightly. However, one trader said a significant price increase is not likely, because then the material sold this week at low prices could end up being re-exported back to the US.
"If they raise prices above 50¢/lb again, all of these tonnes sold will make a round trip and come back," said the trader.
