Nova Chemicals is delaying a previously announced 3-cent/lb price increase on all grades of polyethylene sold in US and Canada, according to a letter to customers obtained Tuesday by S&P Global Platts.
Nova will now seek hikes of 3 cents/lb ($66/mt) on PE in each of the last two months of 2018, after previously announcing increases in October and November, the October 29 letter said. The separate 3-cent/lb hikes will now take effect November 1 and December 1.
While no other producers have been heard officially delaying increases, some US buyers were settling October contracts at a rollover to September prices, sources said, adding that all US producers had given up on the current month.
Nova's delaying of an October increase amid fellow US producers settling flat was not unexpected, with recent market feedback casting doubt on the likelihood of higher contract prices given current market conditions.
US producers were able to push through higher September contract pricing after months of "rolling" proposed increases, with a key driver being higher feedstock ethane and ethylene pricing. Contract PE pricing in the US is typically settled retroactively toward the end of the given month, per market feedback.
Between the end of August and September 18, when both feedstocks reached third-quarter highs, ethane prices rose 48.1% and ethylene prices climbed 36.5%, Platts data showed. Since then, however, prices have come off, by 42% for ethane and 14.1% for ethylene as of Monday's assessments, Platts data showed.
Additionally, recent production and sales data have aligned with market feedback of weak demand and soft sales, both on the domestic and export fronts. US PE stocks fell for a second straight month to end the third quarter 3.4% lower in September, final data from the American Chemistry Council showed.
Total PE inventories in the US stood at more than 4.6 billion lb at the start of October, down some 160 million lb (3.4%) from the beginning of September.
A reduction in US inventories amid lower sales was partially explained by a major US producer taking a month-long planned maintenance at the close of Q3, along with an unplanned outage at different US producer plants, market sources said.
Additionally, lower production in the US has been tied by some market sources to a surge in feedstock ethane and ethylene pricing in September. US producers were heard reducing PE operating rates in September amid shrinking margins and weakening global PE markets, with output dropping off by an estimated 5%-10%, sources said.
Domestic high density PE contract prices were last assessed Wednesday at 66.50-67.50 cents/lb ($1,466-$1,488/mt) for blow molding and injection, while film closed at 69.50-70.50 cents/lb ($1,532-$1,554/mt). Domestic linear low density butene contracts were assessed at 64.50-65.50 ($1,422-$1,444/mt), while low density contracts closed at 78.50-79.50 cents/lb ($1,731-$1,753/mt).
All Platts US PE contract assessments were stable week on week after rising 3 cents/lb from September and are made on a delivered-railcar basis.
