Analysts say PE market to dip through '02

High feedstock cost and slowing demand have highlighted the risks of the polyethylene market, leading some industry consultants to expect a decline in prices and profitability through the first half of 2002. With prices for natural gas – which provides the ethane to produce 70 percent of North American PE – at double their historic levels, producers are in a bind, even though they’ve raised prices successfully an average of 8 cents per pounds to date in 2001. Factoring in slower-than normal PE demand, courtesy of a slowing U.S. economy, darkens the picture even further for PE makers. Those conditions have led Howard Rappaport, an Industry analyst with Chemical Market Associates Inc. in Houston, to project lower prices for PE until mid-2002. U.S. operating rates are expected to follow the same pattern. Rappaport sees U.S. HDPE prices dropping into the mid-to high 30s in cents a pound by mid-2002, with LLDPE prices hitting the low 30s and LDPE prices dipping into the high 30s.