Your Business Pricing Update - March 2007
Polyolefin, PVC Prices Moving Up
Polyolefin prices were poised to rise again this month as suppliers aimed to implement a series of price hikes.
Polyolefin prices were poised to rise again this month as suppliers aimed to implement a series of price hikes. Industry observers attribute the pricing rebound, after recent softness, to increased energy and feedstock costs and steady demand in both domestic and export markets.
The London Metal Exchange (LME) has revised its plastics contracts in an effort to boost trading activity in this new kind of commodity futures, which LME admits has not gained the traction that was hoped for when first launched in May 2005. The somewhat lackluster response is attributed to both the lack of sufficiently frequent contract settlement dates to reflect the physical spot market and to the lack of regional, as opposed to global, pricing for LLDPE and PP.
Based on this industry feedback, LME plans to make several changes effective June 25. There will be six new regional plastics contracts for both PP and LLDPE. There will be separate contracts for European, North American, and Asian deliveries, in addition to the two existing global contracts for PP and LLDPE. In addition, the LME will introduce more frequent short-term contracts (as opposed to every third week now) to make spot trading possible.
PE prices up
Polyethylene prices were expected to move up last month as suppliers aimed to push through their Jan. 1 price hikes of 6¢/lb. A second price increase of 7¢, originally slated for mid-January, has been pushed back to March 1. Some industry sources expect these hikes to take effect incrementally rather than all at once. “We might see the first 3¢/lb implemented by the end of February and the other 3¢ in March. This means that the 7¢/lb increase will most likely be pushed back again,” says Cindy Bryan, director of marketing at resin purchasing consultant Resin Technology Inc. (RTI), Fort Worth, Texas. Meanwhile, the LME short-term futures contract for March in g-p blown film butene LLDPE sold at 51¢/lb, up from January’s 50.3¢.
Contributing factors: Ethylene monomer contract prices in January settled at 39.5¢/lb, a drop of 2¢ after a 3¢ drop in December. However, at press time, monomer contracts looked set to climb 3¢/lb in February and another 2¢ to 3¢ in March. Spot ethylene prices are reported to have surged to 36.5¢/lb, after having dropped under 32¢ earlier.
While not stellar, PE resin demand remains steady, and suppliers predict improvement in the second quarter. While plant operating rates are still generally in the vicinity of 85%, some industry sources see the potential for the year to average out at 90% to 92% capacity utilization.
PP prices poised to rise
Polypropylene prices are expected to move up as suppliers try to push through February’s 5¢ increases. Resin tabs rose 2¢ to 3¢/lb in January. Meanwhile, the LME March futures contract for g-p injection grade homopolymer sold at 52.2¢/lb, up from February’s 50.3¢.
Contributing factors: January propylene monomer contract prices moved up 2.25¢ to 2.5¢/lb. At press time, February monomer contracts were on the way up another 2¢ to 2.5¢/lb. PE suppliers maintain that demand has been growing steadily and they expect plant operating rates to average even higher than the 90% to 95% range seen in 2006.
PVC hike announced
Georgia Gulf led a 3¢/lb increase on PVC resin for March 1. It was followed by Occidental, Formosa, Shintech, and Westlake. Formosa announced a further 3¢/lb increase for Apr. 1. Resin prices eroded 2¢ to 3¢/lb in January but are expected to be flat in February.
Contributing factors: PVC demand improved somewhat in January, but remained spotty last month. Large municipal pipe is strong, while electrical conduit and siding, closely dependent on housing starts, are weak.
PS goes up and down
Polystyrene prices continue their yo-yo movement: down 3¢ in December, up 3¢ cents in January, then down 2¢ to 3¢ cents in February—leaving prices flat since December. Dow, Total, Nova and Ineos have all announced 4¢ hikes for March 1, replacing their previously delayed hikes from Jan. 15. EPS bead producers say they are partially implementing their previously announced 4¢/lb hikes for Feb. 1.
PS demand was sluggish last month, though natural gas and benzene prices were firming with the cold weather.
Polycarbonate & alloys up
Dow Plastics boosted tabs on PC resins, compounds, and blends by 12¢/lb, effective March 15. A Dow spokesman said PC prices have been in a “consistent slide,” but its energy and feedstock costs are on the rise.
| Market Prices Effective Mid-Feb A |
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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.. |
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