Engineering Resin Prices Rise in First Quarter

The trajectory of key factors that drove ABS, PC, and nylon prices up could reverse in the second or third quarter.

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Considering the various factors that contribute to upward pricing of each resin, it is highly unusual to see all commodity resin prices move up at the same time, and in relatively hefty proportions.

But just as prices have risen for commodity materials like PE, PP, PS, PVC and PET, prices of engineering resins like ABS, PC, and nylon (6 and 66), have been following suit. Some suppliers are aiming for second quarter increases, though full implementation may not pan out if the drivers behind the increases reverse their trajectory.

In the first quarter, chief drivers have been higher global prices for hydrocarbons and key resin feedstocks owing to planned and unplanned outages that resulted in snug supplies. But, within the first two weeks of March, there were indications for at least a bottoming out of prices if not an eventual reversal in the coming months for some if not all of these resins. These included a decline in spot prices of several key feedstocks and a return of more adequate supplies.

While this may hamper price nominations now emerging for second quarter from being partial or full implementation, prices could hold firm for some of these resins depending on factors such as domestic and global supply/demand and differences among the resins themselves and their resultant compounds.

Take nylons 6 and 66, for example. According to Mark Kallman, v.p. of client services for engineering resins, PS, and PVC and Resin Technology, Inc. (RTi), Fort Worth, Texas, nylon 6 prices moved up 4-8ȼ/lb in January and 10-12ȼ/lb in February, driven by price increases in benzene and caprolactum.

He ventures that nylon 6 prices in second quarter could start to fall once feedstock prices drop. He characterized demand for nylon 6 in first quarter as pretty decent, fueled by automotive and film markets.

Meanwhile, nylon 66 prices are expected to be up by the end of the first quarter between 7ȼ/lb for compounds and 14ȼ/lb for virgin resins, according to Kallman.

Key contributing factors include a globally tight market on all key feedstocks—benzene, propylene, butadiene and resulting higher prices due to planned and unplanned outages. However, prices are expected to start simmering down as feedstock prices decline. Kallman characterized demand as pretty strong, supported largely by the automotive market sector and the increased demand for trucks and SUVs.

One nylon supplier has already issued new price increases for these nylons. Solvay Performance Polyamides (U.S. office in Alpharetta, Ga.) announced that in addition to its first quarter 14.5¢/lb (300€/T) price hike on its nylon 6 and 66 based compounds and fibers, it was adopting a second wave of prices increases of 14.5¢/lb for Q2. The move is attributed to “the strong and continuous rise in cost of major base-chemicals, some of which have nearly doubled since end of Q4, 2016.”

Kallman noted that it is a very broad increase and ventures that it is meant as a starting point for negotiations which will differ for nylon 6 and 66, and also depending on the particular compound’s additive and glass use levels that reduce the resin content. When asked how he sees this second round of increases shaping up, he ventures in general that a larger portion of the first increase is likely being implemented with a much smaller portion of the second increase likely to be implemented.

This he attributes to what appears to be a reversal of some of those key drivers and not just for nylons 6 and 66  but also for ABS and PC. For example, prices of many of the key feedstocks are now moving lower on the spot market. While this is due to some degree on lower crude oil prices, the bigger factor is an overall improvement in the supply/demand balance of these feedstocks, including benzene, propylene, butadiene, acrylonitrile and styrene monomer.

Both ABS and PC prices were on the rise in first quarter, having held relatively flat through the fourth quarter of 2016. By end of first quarter, ABS prices were expected to rise between 10-17¢/lb. Most of the activity took place in February, with suppliers seeking increases of 5-12ȼ/lb. There is a new round of 5-12ȼ/lb hikes being sought by suppliers this month, but Kallman ventured the March hikes would likely be offset to some degree by decreasing spot prices of feedstocks as well as lower ABS prices overseas. He characterized ABS domestic demand as typically steady for first quarter.

PC prices, meanwhile, were also going up and Kallman ventured that by end of this quarter increases of 5-10¢/lb would have been implemented. ABS suppliers sought increases of 9ȼ/lb in February and 16ȼ/lb in March. Kallman expected that PC pricing would see a reversal in third quarter after a generally expected decline in feedstock prices in second quarter. As with nylon 66, he characterized first quarter PC demand as pretty good, particularly in the case of automotive where the purchasing trend has been toward SUVs and trucks.

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