October contracts settled flat in the US polyethylene (PE) market, with tight supply dashing buyers' hopes for a price decrease during the month, sources said on Thursday.

After a 5 cent/lb ($110/tonne, €80/tonne) increase was implemented for all grades in September, buyers watched feedstock ethylene prices fall to a 15-month low during the month before rebounding this week.

Buyers said the lower feedstock prices, as well as weak domestic demand should have resulted in some give-back of the September price increase.

But with supply tightness still evident in the market, caused in part by ongoing production issues at ExxonMobil's biggest high density polyethylene (HDPE) plant, producers were unwilling to drop prices.

"All pricing is flat for October," said one buyer, who said it expects prices to erode some during November or December.

One producer agreed that there are some signs pointing to a downward trend for the next few months, including some lower export prices and expected weaker demand in the last two months of the year. However, the producer said it is not certain when prices will fall.

"We are coming out of a period of supply tightness and strong seasonal demand and going back to more normal demand with supply coming back," the producer said. "But where that tipping point is, I have no idea."

Following the October settlement, prices for LLDPE butene film were at 79-81 cents/lb DEL (delivered), LDPE film prices were at 88-90 cents/lb DEL and HDPE blow moulding prices were at 79-81 cents/lb DEL, for small volume buyers, as assessed by ICIS .

Major US PE producers include Chevron Phillips Chemical, LyondellBasell, Dow Chemical, ExxonMobil, Westlake, INEOS, Total, Nova Chemicals and Formosa Plastics.