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Global energy and commodity price reporting agency Argus is launching a suite of indexes based on polyethylene transactions in the U.S. These aim to increase market transparency in the domestic markets.
The U.S. polyethylene industry has evolved in recent years, and exports now account for 45-50% of production. Domestic contract prices are heavily influenced by spot market transactions. These spot deals are a strong leading indicator for the domestic contract prices negotiated monthly between producers and buyers in the U.S.
The Argus Polyethylene Transaction Index (PTI) is a set of calculated polyethylene prices based on domestic and export trading activities. Published on the first business day of each month, the PTI covers the three main polyethylene resin families: high-density blow-moulding (HDBM), linear low-density butene film (LLDPEC4), and general-purpose low-density polyethylene (LDPE).
The methodology for the PTI was designed in consultation with participants across the whole polyethylene value chain. It reflects prior month spot export polyethylene prices, weighted to account for the balance between export and domestic sales volumes as reported by the American Chemistry Council. The index excludes discounts or other price adjustment factors and represents the value of domestic sales of prime resin to large volume buyers in railcar quantities.
Argus Media chairman and chief executive Adrian Binks said: “We are pleased to bring new and timely price transparency to the U.S. polyethylene contract market settlements. Our methodology has been validated by participant feedback and shown to avoid the uneven price adjustments arising from bilateral rebate discounts and price settlement delays that have characterized and caused problems for this important market."
