Weak domestic demand, crumbling exports, and plunging feedstock prices brewed a “perfect storm” driving down commodity resin prices in the fourth quarter.

PE PRICES DROP

Polyethylene prices dropped 11¢/lb in October and 15¢ more in November—on top of the 7¢ decline in September. PE prices had risen a total of 42¢/lb this year through August. By mid-November, they had fallen back 33¢, but some industry sources predicted further declines before the year’s end. Meanwhile, the London Metal Exchange (LME) North American short-term futures contract for blown film LLDPE in December plunged to 58.7¢/lb from 76¢ in October.

Contributing factors: A big drop in feedstock prices coupled with poor market demand is expected to put further downward pressure on PE resin tabs. “I would not be surprised to see at least another 10¢/lb fall-off in December,” said Mike Burns, global business director for PE at resin purchasing consultant Resin Technology, Inc. (RTI), Fort Worth, Texas. While PE suppliers are generally doing well in terms of profit margins—particularly with the drop in feedstock and energy costs—processors are not, noted Burns. “Processors are buying as needed, and many have finished-product inventory sitting on the shelf since August. It is not a good time for them to buy until prices hit bottom.” For example, if a processor aiming to buy a railcar of PE on Oct. 31 waited one more day to Nov. 1, when prices dropped 15¢/lb, the buyer would have saved $27,000.

October ethylene contract prices dropped 12¢ to 50-52¢/lb, and industry sources predicted a double-digit drop in November. Said RTI’s Burns, “Contract price could fall below 40¢/lb.”

Flint Hills Resources, which last year acquired the polyolefins business of Huntsman Corp., plans to close its Odessa, Texas, facility by mid-2009. This removes the company from the PE business, where it has capacity for 800 million/lb/yr of LLDPE and LDPE.

PP PRICES back to 2007

After dropping 22¢/lb in August and September, PP prices fell another 5¢ in October and a whopping 30¢ in November. The total decline of 57¢/lb left prices 32¢ below their level at the start of 2008. LME’s North American short-term futures contract for December in g-p injection-grade homopolymer dropped to 37¢/lb from November’s 59¢.

Contributing factors: Fast-dropping feedstock costs, poor domestic demand, a vanishing spot market, the loss of exports, and what now seems like oversupply all contributed to this abrupt downtrend. According to Scott Newell, RTI’s director of client services for PP, prices have followed propylene monomer price drops nearly penny for penny. Contract monomer prices for September dived 20¢, followed by a 5¢ drop in October and what was widely expected at press time to be a 30¢ plunge in November. Newell said there was a possibility that prices would bottom out in December.

Meanwhile, shutdowns of PP resin capacity were announced by both Flint Hills Resources and Ineos Olefins and Polymers USA. The former, as noted above, will close its Odessa, Texas facility, where PP production capacity is reported to be 120 million lb/yr (the company would not confirm this). Upon its acquisition of the Huntsman polyolefins business last year, the company had a total of 1.085 billion lb of PP capacity in Odessa and Longview, Texas, and Marysville, Mich. There are currently no plans to shut the other two sites.

Ineos will close its Battleground Manufacturing Complex in LaPorte, Texas, which produces 520 million lb/yr of PP homopolymer and random copolymers. One of the lines will be closed by the end of this month, and the other by the end of January.

PVC PLUMMETS 6-7¢

PVC prices for October settled 5¢/lb lower and are predicted to drop at least another 6¢ in November, tracking declining feedstock prices. Domestic spot PVC prices in mid November were in the 40-43¢ range, while spot Asian resin (delivered) was around 10¢ lower.

Contributing factors: Resin producers say they have never seen demand so bleak. Pipe market demand is reportedly non-existent. Pipe prices are plummeting as producers try to unload inventory, and their operating rates reportedly are only 25% to 50% of capacity. Several pipe and siding plants have closed abruptly. Resin producers’ operating rates were estimated at 72% in October and in the 60s last month.

PS DOUBLE-DIGIT DROP

In mid-November, PS producers were slashing prices by 10¢ to 20¢/lb. Meanwhile, the spread between GP-PS and HIPS widened to about 10¢/lb from 6-7¢ in October.

Contributing factors: PS demand continues to be very weak across the board. And contract benzene prices took an unprecedented dive in November from $4.24/gal down to $1.60, well below where they should be relative to crude oil at $65/bbl. 

Market Prices Effective Mid-Nov A      RESIN GRADEb ¢/LB ¢/CU INc    ABS           MED IMPACT    95 - 115      359 - 434       HI IMPACT    100 - 135      378 - 510       X-HI IMPACT    110 - 150      415 - 567       HI HEAT    95 - 130      359 - 491       PIPE    95 - 105      359 - 396       SHEET    99 - 115      374 - 434       TRANSPARENT    134 - 205      506 - 774       FITTINGS    94 - 115      374 - 434       PLATING    134 - 205      506 - 774       FLAME RET    129 - 145      487 - 548       STRUCT FM    92 - 102      347 - 385       10% GLASS    134 - 145      506 - 548       30% GLASS    129 - 141      487       ABS/PC ALLOY    154 - 185      532 - 699       ABS/PVC ALLOY    139 - 144      525 - 544       ABS/NYLON ALLOY    199 - 355      752 - 1341       ACETAL           HOMOPOL    151 - 172      7.7 - 8.7       20% GLASS    171 - 235      8.7 - 11.9       COPOLYMER    144 - 160      7.3 - 8.1       25% GLASS    171 - 245      8.7 - 12.4       ACRYLIC           G-P    117      5.0       IMPACT    192      8.2       ACRYLONITRILE COPOL           EXTRUSION    101 - 116      4.0 - 4.6       INJECTION    120 - 135      4.8 - 5.4       ALKYD  65 - 74    4.9 - 5.5       CELLULOSICS           ACETATE    187      8.6       CAB    189      8.2       CAP    189      8.2       DAP (G-P)  251 - 497    16.7 - 34.7       EPOXY           G-P RESIN    116 - 126      NAd       COMPOUNDS               C/B/Te    123 - 166      9.4 - 12.9       R/C/Df    208 - 271      15.3 - 20.1       SEMICONDUCTOR               NOVOLAC    193 - 228      13.1 - 15.9       ANHYDRIDE    188 - 268      13.9 - 19.2       EVA           INJECTION    69 - 71      2.3 - 2.4       FILM EXTRU    67 - 69      2.3       EVOH  330    15       FLUORO-POLYMER           CTFE    5000 - 6000      385 - 462       ECTFE    1200 - 1680      90.7 - 120       ETFE    1205 - 1730      80.7 - 115.8       FEP    971 - 1470      74.8 - 113.2       PFA    1550 - 2520      120 - 195       PTFE    500 - 950      33.5 - 63.6       PVDF    730 - 1100      47 - 70       IONOMER           PACKAGING    127 - 166      4.3 - 6.0       INDUSTRIAL    150 - 244      5.0 - 8.3       LIQUID-CRYSTAL POLYMERS           INJECTION MIN FILLED    690 - 1035      44.2 - 72.1       GLASS FILLED    695 - 895      40 - 52       CARBON FILLED    1700 - 2000      83.2 - 138.6       UNFILLED    1000 - 1200      58 - 70       EXTRUSION UNFILLED    1200 - 2200      60.5 - 110.9       MELAMINE COMPOUND  90 - 94    5.5 - 5.6       MELAMINE/PHENOLIC COMPOUND  75 - 83    4.5 - 5.0       NYLON           TYPE 6    139 - 159      5.7 - 6.5       MIN FILLED    131 - 144      5.4 - 5.9       30% GLASS    148 - 173      6.0 - 7.0       TYPE 66    153 - 168      6.3 - 6.9       MIN FILLED    151 - 159      6.2 - 6.5       30% GLASS    142 - 192      5.8 - 7.9       TYPE 69    250 - 276      9.7 - 10.7       TYPE 6/10    286 - 313      12.4 - 13.6       TYPE 612    400      15.3       30% GLASS    309 - 311      14.7       40% GLASS    309      14.7       TYPE 46    295      12.6       TYPE 11    650 - 750      24.3 - 28       30% GLASS    NAd - NAd      NAd - NAd       40% GLASS    NAd - NAd      NAd - NAd       TYPE 12    318 - 341      12.1 - 13.0       30% GLASS    327 - 350      14.7 - 15.8       50% GLASS    299 - 340      15.6 - 17.8       TRANSPARENT AMORPHOUS    247 - 360      10.3 - 15.0       PHENOLIC MOLD COMP  75    3.8       REINFORCED GRADES    105 - 268      6.1 - 16       POLYAMIDE-IMIDEg           UNFILLED    2750      148.5       30% GLASS    2500      135       30% CARBON FIB.    3500      185       POLYARYLATE  200 - 280    8.8 - 12.3       POLYARYL SULFONE  440    21.8       POLYBUTYLENE           G-P    94 - 96      3.1       FILM    88 - 91      2.9       PIPE               COLD WATER    116 - 120      3.9 - 4.0       HOT WATER    162 - 166      5.5 - 5.6       POLYCARBONATE           INJECTION    171 - 182      7.4 - 7.9       20% GLASS    177 - 190      7.6 - 8.2       30% GLASS    178 - 217      7.6 - 9.3       EXTRUSION    145 - 180      6.3 - 7.8       BLOW MOLD    150 - 185      7.0 - 7.5       STRUCT FOAM    149 - 181      6.4 - 7.8       20% GLASS    235 - 255      10.1 - 11.0       FR    166 - 197      7.1 - 8.5       CD    135 - 195      5.8 - 8.4       POLYESTER (TP) PBT TYPE           UNFILLED    145 - 150      6.8 - 7.3       HI-IMP    165 - 175      7.8 - 8.3       30% GLASS, FR    195 - 215      9.2 - 10.1       STRUCT FOAM    159 - 165      NAd       PET           BOTTLE (RAILCAR)    82 - 86      4.0 - 4.1       MOD PET               30% GLASS    132 - 143      7.4       55% GLASS    148 - 155      9.8       30% GLASS FLAME RET    147 - 157      9.2       PETG COPOL    114 - 124      5.2 - 5.6       POLYESTER THERMOSET           G-P ORTHO    161 - 171      NAd       ISOPHTHALIC    190 - 205      NAd       BIS-A    225 - 245      NAd       PEEK  4400    231       30% GLASS    3300      173       POLYETHERIMIDE  641 - 646    29.3 - 29.5       30% GLASS    526 - 531      24.0 - 24.2       POLYETHERKETONE (PEK)  2950    130.1       30% GLASS    2600      153       POLYETHERSULFONE  350 - 400    17.2 - 19.7       30% GLASS    425 - 525      21 - 25.9       POLYETHYLENE (RAILCAR) LDPE           G-P MOLDING & EXTRU    53 - 55     1.8      INJECTION    55 - 57     1.8 - 1.9      LID RESIN    57 - 59     1.9      LINER    55 - 57     1.8      CLARITY    51 - 53     1.7 - 1.8      EXTRU COATG    56 - 58     1.8 - 1.9      BLOW MOLD    58 - 60     1.9      LLDPE, BUTENE BASED           G-P MOLDING    50 - 52     1.7      LME 30-DAYj    58.7     1.9      FILM    55 - 57     1.8 - 1.9      ROTOMOLD    52 - 54     1.7 - 1.8      LLDPE, HAO-BASED           G-P MOLDING    53 - 55     1.8      LID RESIN    63 - 65     2.0 - 2.1      LINER FILM    56 - 58     1.8 - 1.9      HDPE           G-P INJ MOLD    53 - 55     1.8 - 1.9      FILM    60 - 62     2.1      BLOW MOLD    61 - 63     2.1 - 2.2      HMW-HDPE           BLOW MOLDING    57 - 59     1.9 - 2.0      FILM    58 - 60     2.0      PIPE    65 - 67     2.2 - 2.3      UHMW-PE  122 - 152    4.1 - 5.1       PPE/PPO BASED RESIN           INJECTION    180      6.8       20% GLASSh    283      12.3       30% GLASSh    291      13.3       EXTRUSIONh    242      9.2       STRUCT FM    231      NAd       PPS           40% GLASS    450 - 520      27.0 - 31.2       55% GLASS/MINERAL    345 - 420      22.7 - 27.7       65% GLASS/MINERAL    270 - 315      18.9 - 22.1       POLYPROPYLENE (RAILCAR)           G-P HOMOPOL INJECTION    48 - 50     1.6      LME 30-DAYj    37.0     1.2      EXTRUSION FIBER    46 - 48     1.5 - 1.6      PROFILES    54 - 56     1.7 - 1.8      RANDOM COPOL               BLOW MOLDING    52 - 54     1.7      FILM    52 - 54     1.7      INJECTION    51 - 53     1.6 - 1.7      IMPACT COPOL               MED IMP    62 - 64     2.0 - 2.1      HI IMP    64 - 66     2.1      POLYSTYRENE (RAILCAR)           G-P CRYSTAL    78 - 84     2.9 - 3.1      HI HEAT    81 - 86     3.0 - 3.2      HIPS    88 - 94     3.3 - 3.5      SUPER HI IMP    94 - 99     3.5 - 3.7      FR    101 - 106     3.8 - 4.0      STRUCT FM (FR)    90 - 93     3.4 - 3.5      EPS           UNMODIFIED    85 - 88     NAd       MODIFIED    86 - 90     NAd       POLYSULFONE  650 - 750    29 - 33       10% GLASS 430 20.6    799 - 875      36 - 39       30% GLASS 372 20.01    699 - 775      31 - 35       POLYURETHANE (TP)           ESTER TYPE    185 - 255      8 - 11       ETHER TYPE    245 - 295      10.6 - 13       PU ISOCYANATES           POLYMERIC MDI    125 - 145      NAd       80/20 TDI    135 - 145      NAd       PVC RESIN (RAILCAR)           G-P HOMOPOL    49 - 61     NAd       PIPE    48     NAd       FILM    54 - 56     NAd       COPOLYMER FLOORING    69 - 74      NAd       DISPERSION HOMOPOLY    81 - 87      NAd       COPOLYMER    86 - 90      NAd       CPVC PIPE COMPOUND    119      NAd       PVDC           EXTRUDABLE    162      NAd       SILICONES           MOLD. COMP.    581 - 640      38.1 - 39.3       SPECIALTY GR.    891 - 3148      NAd       SILICONE/EPOXY    339 - 343      22.5 - 22.8       STYRENEACRYLIC  108 - 112    3.7 - 4.0       SAN (G-P)  80 - 88    3.0 - 3.3       STYRENE MALEIC ANHYDRIDE           G-P    110 - 115      4.2 - 4.3       HI IMP    130 - 140      4.2 - 4.5       FR    175 - 183      6.7 - 7.0       TP ELASTOMERS           OLEFINIC    70 - 76      2.4       POLYAMIDE    300 - 350      10.9 - 12.7       POLYESTER    200 - 310      8.8 - 13.6       STYRENIC    82 - 237      2.9 - 8.3       UREA MOLDING COMPOUND           BLACK & BROWN               WHITE & IVORY               VINYL ESTER           COR RES    236 - 255      NAd       HEAT & COR RES    261 - 268      NAd

KEY: Colored areas indicate pricing activity. An arrow () indicates direction of price change. aTruckload, unless otherwise specified. bUnfilled, natural color, unless otherwise specified. cBased on typical or average density. dNot applicable. eNovolac and anhydride grades for coils, bushings, transformers. fNovolac and anhydride grades for resisitors, capacitors, diodes. gIn quantities of 20,000 lb. h19,800-lb load. jLME 30-day futures contract for lots of 54,564 lb..