OREANDA-NEWS. June 17, 2015. US low density polyethylene prices were assessed June 10 at \\$1,378-\\$1,400/mt (62.5-63.5 cents/lb) FAS Houston, down \\$22/mt, as offers from US producers into key export destinations trended lower.

Trader sources also saw indications that more resin could be coming available after most were limited to standard allocations at the start of the month

Preliminary data released June 10 by the American Chemistry Council showed US LDPE inventories rose by more than 14 million lb in May.

With domestic producers seeking an increase in July, there were expectations producers could turn to the export market in an attempt to keep inventories low through the end of June, sources said.

Domestic contracts remained unsettled, with talk of a potential rollover based on the lack of price announcements for the month.

May domestic LDPE contracts were assessed at 84-85 cents/lb (\\$1,852-\\$1,874/mt), up 5 cents/lb from April after producers successfully implemented an increase last month. An additional 5-cent increase has been announced for July.

Market sources said pushing an additional increase through could prove difficult, with some pointing to the increase as a potential move to keep June demand up after strong sales in March, April and May.

May LDPE production stood at more than 587 million lb, while total sales exceeded 573 million lb, according to ACC data. Sales fell more than 33 million lb from final April totals.

LATIN AMERICA

Latin American spot import prices were stable in Peru and lower in Brazil on June 10 following talk of lower-priced offers from key regions, sources said.

Import assessments for low-density polyethylene were flat in Peru on week assessed June 10 at \\$1,500-\\$1,510/mt CFR, amid stable US offers. US-origin material was heard mostly stable with offers trending in the low-\\$1,500s, sources said.

Despite fewer offers from the US, sources said LDPE was readily available along the West Coast of South America. "Right now, we are seeing a lot of material in Peru," a Lima-based buyer said. Market participants said that sellers were holding offers amid last week's announcement of an increase of 5-cent/lb (\\$110/mt) for July for all grades of polyethylene from US producers.

Regional South American producers announced similar hikes of 5 cent as demand has grown for material

throughout the second quarter of 2015 and buyers along the Pacific coast of South America have turned to regionally sourced material for prompt delivery.

Meanwhile, CFR FE Asian pricing fell \\$10/mt week on week as demand has been described slowing in the region. Regional South American and US-origin material has been the preferred choice for buyers due to the shortened delivery time, sources said.

Shipments from Asia have been heard shipping as late as July which would likely lead to a early August delivery, according to market feedback.

In Brazil, the LDPE import assessment dropped \\$5/mt on the week at \\$1,445-\\$1,455/mt CFR Brazil, as domestic demand was talked thin.

Prices were also pressured down by global markets such as Asia and US. Asian low density polyethylene prices fell due to weak demand in the lead up to the Muslim holy month of Ramadan which starts June 18, sources in Asia said.

"The Brazilian market is still very weak because manufacturers were buying less material and reducing their production," a Brazil-based distributor said. "Braskem prices are better to do business than importing material."

In addition, participants said that even with import prices getting lower, they were not attractive, with inventories sufficient for at least two months.

Participants said Brazil cut resin purchases considerably in a year-on-year span. In the domestic market Braskem plans to increase, on average, roughly \\$128/mt in all PE's resins, a source said.

The reason for the price increase was depreciation of the local currency against US dollar. June 10's exchange rate was 3.11 reals/US dollar.

In exports from Brazil, the FOT assessment were stable at \\$1,545-\\$1,555/mt to Mercosur, as offers from Brazil were stable, though for certain volumes and clients, material from Brazil was sold at a discount.

"Producers had to make discounts in order to sell more volumes in the end of May," a Paraguay-based distributor said.

Braskem also raised export prices, a source said. PE prices rose by an average of \\$5-\\$102/mt, depending on grade and region, the source said.

ASIA/MIDDLE EAST

Asian low density polyethylene prices fell due to weak demand in the lead up to the Muslim holy month of Ramadan which starts June 18.

During this month -- which is a period of daily fasting from sunrise to sunset -- demand is typically low in the Middle East and Southeast Asia.

It is typical for manufacturers to lower their operating rates during the month, while some factories also undergo maintenance shutdowns and workers work shorter hours, market participants said.

In plant news, China's Shanghai Petrochemical, a subsidiary of Sinopec, plans to restart its 100,000 mt/year LDPE line in Shanghai on June 14, said a source close to the company June 10. It was shut May 31 for turnaround.

The company's other 100,000 mt/year LDPE plant was running normally, the source added.

EUROPE

European low density polyethylene spot prices fell Eur25/mt on the week to Eur1,675/mt FD NWE, falling for the first time since February amid expectations of easing supply.

LDPE spot prices had touched fresh record highs every week since mid-April. The fall was cushioned by shortness in some grades like 0.3 MFI, sources said. At the same time, availability of off prime grade increased, sources said.

Sabic restarted its low density polyethylene plant in Wilton, Teesside, northeast England, sources said.

The force majeure on LDPE supplies remains, sources said. "We are doing all that is required to resolve the situation as soon as possible and to reestablish normal operations. Will keep you informed when we can expect the unit to be back in full production," a company spokeswoman said.

The fall in Asian prices contributed to easing bullishness in Europe. LDPE was assessed at \\$1,380/mt CFR Far East Asia June 10, down \\$10/mt week on week.

PE prices in Europe were the highest globally and were attracting imports, sources said. Converters had begun buying more "carefully" and "selectively," a converter said.

In the contract market, prices were flat on the week at Eur1,750/mt FD NWE. So far prices have moved by Eur110.mt on the month.

Converters were "fiercely resisting" three-digit increases. In other production news, Total's LDPE plant in Carling, France, was facing production issues due to the outage at the Naphtachimie cracker in Lavera, sources said.

It was not clear if force majeure had been declared on supplies from the 60,000 mt/year plant.

A fire erupted at the Naphtachimie cracker in Lavera on May 17. The Naphtachimie cracker in Lavera is still not in production, Total said in the letter earlier this week to its customers.

"The operator of the Lavera's units is active in repair works and a startup of the units producing our raw material is estimated in the fourth week of June," it said.

Naphtachimie is a joint venture between Total and Ineos.