June contracts in the US/Canada polyethylene (PE) market settled down by 15¢/lb, the first decrease since May 2025, as high inventories and lower export prices forced producers to give back some of the 45¢/lb in increases added since the beginning of the US-Iran war.
The decline came following extended negotiations with some producers attempting to hold the decline to 10¢/lb. However, when faced with enough competitive offers at a decline of 15¢/lb, even those producers agreed to the lower settlement.
The price decline follows steep declines in export prices, which have fallen by more than 30¢/lb, depending upon grade, since late April. Using LLDPE butene as an example, prices are down by 31.35¢/lb since reaching a peak on 17 April.
Export prices began to decline in late April as low prices out of China pressured global values. The decline continued in May, as US and Canadian producers added more than 800mn lb to inventories at the end of the month on a combination of healthy production levels and weak domestic and export demand.
Market participants expect July contracts to fall further, with some participants saying they expect prices to be down by at least 30¢/lb by the end of the month.
The drop of 15¢/lb "is not enough", said one US PE buyer. "It seems like a lot, and it is a lot, but it is not enough."
The buyer said that with producers selling to the export market at prices more than 20¢/lb below US contract levels, they are putting domestic customers at a disadvantage to Asian converters. Asian converters can produce finished goods using the lower-priced resin and send that product back to the US, undercutting US converters, particularly for items such as film, which is easily shipped.
Some market participants suggested that the recent escalation of the Middle East war could shift sentiment and eventually price direction. If crude prices continue to rise, it could push global PE prices higher, which might allow US producers to raise their prices again.
