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PE producers in northeast Asia may cut their operating rates

April 13/2011

(ICIS) -- Polyethylene (PE) producers in northeast Asia may cut their operating rates in the coming weeks if regional PE prices fail to catch up with rising spot ethylene feedstock prices in Asia, industry sources said on Wednesday. The benchmark linear low-density PE (LLDPE) film grade prices were assessed at USD1.380-1.410/tonne (EUR 952-973/tonne) CFR (cost & freight) China and spot ethylene was trading at USD 1.330-1.380/tonne CFR northeast Asia for the week ended 8 April, ICIS data showed.

Resins producers said they were concerned that their margins would be squeezed if the gap between spot PE and ethylene feedstock prices narrowed further, a northeast Asian producer said.

The weekly average spot ethylene price in northeast Asia has risen by USD 40/tonne or 3% since 11 March, while LLDPE film grade prices have dropped by USD 75/tonne or 5% over the same period, according to ICIS data.

Naphtha-based producers in northeast Asia typically have to price PE at a USD150/tonne premium over ethylene, but current regional spot PE and ethylene prices were trading at around the same level, the producer said.

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