Dear Overvalued Polyethylene Customer,
In order to take advantage of current market dynamics in the North American polyethylene market, we are going to raise our price by another 5 cents per pound on Oct. 1. This is in addition to our previous four increases of 19 cents per pound over the past four months and will represent between a 60 percent and 70 percent increase over five months.
We realize that this will likely put the price in North America well over 20 cents per pound higher than the price in Asia, which will allow the Asian converters to begin supplying a large amount of finished goods into North America at the cost of your business. However, our short-term profitability is more important to us than the long-term success of our North American customers.
So good luck!
Your North American Polyethylene Supplier
The above letter is meant to be both sarcastic and tongue-in-cheek, but the sentiment is intended to be very real.
We are all aware that North American PE suppliers export significant volumes of PE at pricing that is much lower than they sell to North American customers. While we understand the need to do this, we do not un- derstand a business model that then allows Asian converters to purchase at pricing that is so low that they can produce finished goods at prices that steal market share from U.S. converters. It is time that we began having real dialogue as an industry regarding this practice.
Short term, North American converters lose. Long term, both North American suppliers and converters lose.