Higher Prices Return
In the teeth of a deepening recession, commodity resin suppliers managed to raise prices in the first two months of the year, spurred by a sudden uptick in monomer tabs. YES, PE PRICES ARE UPPolyethylene suppliers succeeded in hiking prices 7¢/lb in January and February, giving them full implementation of their first increase of the year.
In the teeth of a deepening recession, commodity resin suppliers managed to raise prices in the first two months of the year, spurred by a sudden uptick in monomer tabs.
YES, PE PRICES ARE UP
Polyethylene suppliers succeeded in hiking prices 7¢/lb in January and February, giving them full implementation of their first increase of the year. This came after prices crashed between August and December by a total of 48¢/lb. PE plant capacity utilization rates have reportedly dropped below 70%. That didn’t stop resin makers from announcing a second 5¢ hike for Feb. 1, but it has been delayed. Meanwhile, the London Metal Exchange (LME) North American short-term futures contract in blown-film butene LLDPE for March dropped to 34¢/lb from February’s 39¢.
Contributing Factors: The good news is that PE processors reportedly have been able to raise their prices of finished goods by about 10%, passing on the 7¢ to 8¢ resin price hikes they have incurred. PE resin tabs were driven by ethylene monomer price hikes. Contract ethylene prices in January moved up to 31.5¢/lb from December’s 28¢. According to Mike Burns, global business director for PE at resin purchasing consultant Resin Technology, Inc. (RTI) in Fort Worth, Texas, that little uptick in monomer prices squeezed PE resin margins enough to drive up prices, supported by a bout of resin pre-buying in January, ahead of announced price hikes. Ethylene monomer contract prices are expected to be flat in February.
PP PRICES ROSE, TOO
Polypropylene prices moved up 2¢/lb in January, representing partial implementation of the year’s first hike of 6¢/lb. Price hikes of 6¢ to 8¢, effective Feb. 1, were also expected to be implemented by this month. Meanwhile the LME’S North American short-term futures contract in general-purpose injection grade homopolymer in March dropped to 29.9¢/lb from February’s 39.2¢/lb.
Contributing factors: January propylene monomer contract prices settled 2¢ higher at 22¢/lb and increases of 6¢ to 7¢ were on the table for February. Scott Newell, RTI’s director of client services for PP, says there was monomer oversupply in the fourth quarter of 2008 and prices were “overcorrected” downward. But then, he says, “Propylene supplies were aimed toward the propane stream for fuel. This, along with crackers being shut down and refineries running at lower rates, served to tighten up propylene supply.”
PP resin demand is still very low, but demand bumped upward in the first couple of months of the new year, following a strong de-stocking effort in fourth quarter. “People are back buying resin because their inventories had been cleaned out,” says Newell, although he expects PP demand in the first half of this year to be lower than last year’s first half. Industry estimates peg plant utilization at 70% or lower.
PVC: EXPECT AN INCREASE
PVC resin producers say they were invoicing PVC at prices 5¢ higher last month. Processors, however, say the increase would be only 2¢ to 3¢ in February. Shintech’s deferred 2¢ hike for March 1 seems to be forgotten.
Contributing factors: The price increase was said to be justified by rising ethylene monomer contract prices, which were 5¢ higher (at 31.5¢/lb) in January than in November. Ethylene in February appeared flat.
Demand for rigid PVC remains very weak, though processors said last month it was better than in the fourth quarter of 2008. Pipe processors appear to be working only three- to four-day weeks, while other PVC processors say they’re working five days.
PS PRODUCERS WANT A HIKE
Americas Styrenics in late January sent customers a letter announcing a 5¢ increase for Feb. 15, soon seconded by Ineos Nova and Total. Processors protested the two-week notice, and Total deferred its hike to March 1.
Contributing factors: PS producers had lowered prices 8¢ to 9¢/lb in January, when benzene feedstock prices fell. In mid-February, benzene prices bounced back—up 5¢ from January. Contract benzene for February was $1.35/gal; spot benzene was $1.40 to $1.42. PS demand continues to be very weak, especially for refrigeration and CD boxes, despite a slight seasonal uptick in packaging.
Market Prices Effective Mid-Feb A | |||
RESIN GRADEb | ¢/LB | ¢/CU INc |
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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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