Commodity resin producers keep pushing for price increases, but their success is limited by weak market demand and soft prices of many monomers. PET prices may rise, however, along with those of engineering resins and thermosets.
Polyethylene prices were largely flat in March, after a drop in February that shaved off 3¢ of the 9¢/lb increases suppliers have implemented since last October. Also, a 6¢/lb hike was delayed from March to April 1. Meanwhile, the London Metal Exchange (LME) North American futures contract for May in blown film butene LLDPE rose to 67.6¢/lb from April’s 65.7¢.
Contributing factors: Softening monomer prices will make it difficult for resin suppliers to implement price hikes, predicts Mike Burns, global business director for PE at resin purchasing consultant Resin Technology, Inc. (RTI) in Fort Worth, Texas. He says March ethylene monomer contract prices moved up from 58.5¢ to 61.5¢/lb, a result of planned and unplanned plant outages that drove up spot ethylene prices. By mid-April, however, ethylene spot prices had dropped below 55¢/lb, according to Burns. At that point, unsettled April ethylene contract price bids ranged from 52¢ to 58.5¢/lb. “May contract prices could move even lower, possibly to under 50¢/lb,” he said. Ethylene comes from ethane, which had been tracking crude oil prices to a high of $1.17/lb in January. Now ethane appears to have stopped following oil prices and has leveled off at 94¢ to 97¢/lb.
Demand for PE is flat overall, except for food packaging and agricultural films. PE exports are also down, primarily due to container shipping congestion at eastern U.S. seaports.
Polypropylene prices moved up in March by 1 to 2¢/lb, as a result of 2¢ increases that were slated for February. A new 5¢ increase emerged for April 1. The May LME North American short-term futures contract for g-p injection-grade homopolymer sold for 68.9¢/lb, a half-cent uptick from April.
Contributing factors: Since January, suppliers have raised prices by 2¢ to 4¢/lb, although they had aimed for increases totaling 9¢/lb. The latest hike is tied directly to feedstock prices. March propylene contracts moved up 2¢/lb and April contracts settled early on an increase of 3.5¢/lb.
Driving monomer prices, which hit a new record of 65¢/lb with the April increase, is a significant drawdown of propylene supplies as a result of planned and unplanned refinery shutdowns. Says Scott Newell, RTI’s director of client services for PP, “We think the monomer supply will improve over the next two months.” Newell also notes that rising monomer prices and port congestion have slowed resin exports.
Export and domestic demand was down by 3% overall in the first quarter. “Except for a couple of markets like food and consumer packaging, everything is slow,” says Newell. PP suppliers curtailed plant operating rates, now estimated to be in the 80-85% range vs. around 95% for much of last year. Some industry sources do not believe suppliers will be able to get the full 5¢ increase, noting that even the 2¢/lb March hike was trimmed back.
PET prices are expected to move up in the second quarter. In mid-April, suppliers were aiming to implement 5¢/lb price hikes, but any movement was more likely to show up in May.
Contributing factors: The new resin increases are driven by increased costs of paraxylene and ethylene glycol. “Processors can expect to see higher prices in the second quarter,” stated RTI’s PET global business director Mike Dewsbury. “I don’t believe resin producers will add anything to their profit margins, though I’m sure they’ll try. They must pass through any increases in feedstock costs to stay afloat.”
Although PET dropped 2.5 to 3¢/lb by the end of February, it was largely due to the 6¢ decline in ethylene glycol prices. Contract prices for feedstocks were unsettled in mid-April, but increases of 4¢ to 4.5¢/lb were being sought for paraxylene and 1¢ to 2¢/lb for ethylene glycol. Together they would translate into increases of at least 2-3¢ for PET.
Demand for PET in the first quarter was estimated to be flat, though some seasonal uptick appeared at the start of the second quarter.
A pair of 2¢ hikes was announced for January and February, but the second hike was delayed to March by Formosa and OxyChem, where it hangs in limbo. March PVC prices were expected to be flat.
Contributing factors: Ethylene monomer price dipped 3¢ in February, rose 3¢ in March, and was expected to be flat or off 2¢ again in April, which explains why PVC prices aren’t moving. Resin demand remains very weak in home construction and renovation. Commercial construction is reportedly flat. Georgia Gulf idled its Oklahoma City plant along with one idled earlier in Sarnia, Ont., taking a total of 1 billion lb temporarily out of the market. Shintech’s new 300-million-lb plant is expected to start up in June.
PS resin producers put together a combined 7¢/lb in increases from February through April. Most got 2¢ in February and 3¢ or 5¢ in March. Activity in April is expected to be flat.
Contributing factors: PS demand was way down in March and preliminary figures for the first quarter were down 5.3% from the same period last year. But seasonal demand appeared to be coming back in April. Benzene prices softened in April, when contracts settled at $3.75/gal.
More price increases for nylon and PBT followed BASF’s lead in March. DSM hiked nylon 6 and 66 by 15¢/lb on March 31. Solutia raised tabs on nylon 66 by 10¢/lb on April 15. Du Pont’s increase was 12¢/lb, effective May 1.
DSM also raised PBT prices 15¢/lb on March 31. Du Pont increased PBT, PET, Thermx high-performance polyesters, and Hytrel copolyester TPEs by 10¢ on May 1.
Following AOC and Reichhold’s unsaturated polyester/vinyl ester increases of 7¢/lb last month, CCP and Interplastic announced similar hikes for April 28 and May 1, respectively.
|Market Prices Effective Mid-Apr A|
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..