Polyethylene Overview

Buyers reported that resin availability is improving but certain grades such as LLDPE C6 and HDPE.  Blow Molding remain tight. Production in the US continues to improve with reports that most units are up and running as ethylene supply improves due to crackers coming online. However, several plants are not back to full production with reports of two major producers running at about 80%25 of the pre-freeze levels due to mechanical/feedstock limitations. Several resin producers are indicating inventory levels should improve in May, resolving many of the force majeure events but allocations are likely to continue through June. Price increases for all PE grades of 5-6 cpp have been communicated to the domestic market effective May 1, 2021. Domestic HDPE spot prices (FOB Houston Railcar) were reported in the range of 83-87 cents per pound (cpp) on a notional basis. LLDPE butene resin prices were reported in the 80-84 cpp range (down 1 cpp) and LDPE was reported flat with prices in the range of 88-92 cpp.

The effect of high resin prices are starting to show up at the grocery stores as P&G, Kimberly-Clark, Hormel Foods, and other brand owners have announced price increases for household staples such as diapers, detergents, and baby products that will take effect during the June-September time frame. The consumer price index, which measures what consumers pay for everyday items, jumped 2.6%25 over the past 12 months, the largest 12-month increase since August 2018.

The US spot PE export market continues to see increased competition with Asia imports, particularly in the LATAM regions particularly in Colombia. Spot price estimates (FCA Houston Railcar) were reportedly flat for HDPE blow molding resin (80-84 cpp, notional), LLDPE butene 75-79 cpp and LDPE in the range of 83-87 cpp.

Mexico buyers reported that demand appears to be dropping. A few weeks ago, sellers indicated it was very easy to sell product but right now it is very tough to move product. Buyers are holding back on purchasing more resin on the expectation that prices will continue to decline. The US-Mexico spot PE prices (DAP Laredo) were steady from last week with HDPE blow molding prices (DAP Laredo) up 1 cpp in the 83-87 cpp range (notional). LLDPE C4 prices were reported in the range of 79-83 cpp, and LDPE prices up 1 cpp in the range of 91-95 cpp.