North America Commodity Chemicals: Negative PE Pricing Outlook Suggests Further Revisions in 3Q

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North America Commodity Chemicals: Negative PE Pricing Outlook Suggests Further Revisions in 3Q

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14 Jul 2026 05:00:00 ET │ 19 pages

North America Commodity Chemicals

Negative PE Pricing Outlook Suggests Further Revisions in 3Q

CITI'S TAKE

Patrick Cunningham AC

With the recent downward 15cpp PE settlement, we update our PE M2M +1-212-816-6684

model, reflecting additional July and August price declines forecasted by patrick.cunningham@citi.com

CMA. Based on this updated outlook and earnings sensitivity, we believe

Street estimates may be under-appreciating additional >$400mm Alexander Yi

downside risk for PE producers in 3Q. That said, better operating +1-212-816-4220

performance, cost takeouts, and a more sanguine view of pricing stability alexander.yi@citi.com

could help modestly offset steep downward revisions. While renewed

Middle East escalations could upend this view, we think it is a reasonable Rachel Lee

starting point, along with global oil prices moving these expectations daily. +1-212-816-4559

rachel.lee@citi.com

Buyers Still Take ‘Wait-and-See’ Approach — Considering that PE prices rose

10cpp in March at the start of the Iran conflict, followed by 30cpp hike in April,

pressure on downward revision for PE has been high as Brent prices reverted towards

pre-conflict levels. Despite lower PE prices, activity in July has been slow with

limited restocking activity. Domestic spot purchase activity has also been slow given

the holiday with converters continuing to purchase on as needed basis.

What Do the PE Price Declines Imply? — Given the late June PE settlement last

week, we update our PE M2M to reflect the -15cpp settlement in June, along with

current CMA forecasts of -10cpp in July and another -10cpp in August. Based on this