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[ Resin Pricing Chart ]

Polyolefin prices were on the way up in October, as resin suppliers pointed to rising monomer costs to justify their previously announced resin hikes. So far this year, polyethylene prices have gained a total of 15¢ to 17¢/lb (the larger figure is for hexene and octene LLDPE). Polypropylene prices have risen a total of 11¢/lb.

According to Mike Burns, global business director for polyethylene at resin purchasing consultant Resin Technology, Inc. (RTI), Fort Worth, Texas, this is the first year in recent memory in which 10 months of continuous PE price increases were implemented—five in total—with no price reversals. PE suppliers saw double-digit profit margins (10¢ to 17¢/lb, Burns says) through August, compared with polypropylene suppliers’ margins of only 2¢ to 3¢/lb.

Despite lackluster domestic demand for polyolefins, an exceptionally strong export market for most of this year has kept resin producers’ plant operating rates above 90% and their inventories in balance. Still, industry sources expect weakening domestic and export demand to bring resin buyers some price relief late in the year—though less than occurred at the end of 2006.

Editor’s note: Based on new information, we have adjusted our polyolefin prices in the table lower than last month, in order to bring them closer to market reality.

Polyethylene prices up
Last month, it looked like PE producers would push through the full 4¢ increase that had been announced for Sept. 1. However, they face uncertain prospects of implementing the 5¢ hike announced for Sept. 15.

The London Metal Exchange (LME) short-term futures contract for November in blown film butene-LLDPE sold at 57.3¢/lb, slightly up from October’s 57.1¢.

Contributing factors: Suppliers attribute this price hike directly to increased ethylene monomer contract prices, which rose 3¢ to 52.5¢/lb in September, and further 2¢ to 4¢ increases loomed for October. Monomer prices are linked to escalating ethane prices and supply tightness. Another factor is a recent surge of resin exports.

“This latest price increase will not help domestic processors, as their business has been relatively slow and they have had difficulty in passing through this year’s increases,” says RTI’s Burns. One leading PE supplier says domestic demand in October was more robust than in September.

Still, Burns and other industry sources expect some price relief over the next two months. As a sign that things may be changing, spot PE prices dropped for the first time in August and remained flat in September. Also, some softening of monomer prices is possible as plant operating rates return to more normal levels after a series of planned and unplanned production outages.

PP prices rising
Polypropylene prices were expected to move up last month as suppliers seemed set to implement their Oct. 1 hikes of 3¢ to 4¢/lb. Meanwhile, LME’s futures contract for g-p injection-grade homopolymer for November sold at 59.3¢/lb, up from October’s 57.4¢.

Contributing factors: Driving this increase are higher monomer costs. Although record-high propylene monomer prices appeared to peak in August, the subsequent price relief was short-lived. One leading PP supplier attributed high monomer prices to planned and unplanned production outages, higher oil prices, and shifts to the use of lighter feedstocks, which reduces propylene supply.

September monomer contract prices moved up 2.5¢ to 53.75¢/lb. With the monomer said to be very tight, October propylene contracts were most likely to rise another 3¢, according to Scott Newell, RTI’s director of client services for PP. At the same time, Newell says resin exports are starting to slow, inventories are creeping up, and spot PP prices have dropped.

Engineering resins go higher
On Nov. 1, DuPont hiked prices of nylons, PET, PBT, PCT, and LCP by 12¢/lb, acetal by 10¢ and Hytrel TPE by 15¢. Competitors are considering pricing moves, too.

DuPont also raised tabs on ethylene copolymers—6¢ for EVAs and 8¢ on all others Nov. 1.