PS Prices Rise While Others Sink
Prices of PE and PP were expected to bottom out in January, when domestic polyolefin prices were largely in parity with global prices. Crude-oil prices moved higher in the first week of January amid escalating tensions in the Mideast, which helped feed international market sentiment that PE and PP prices had reached a bottom.
Driven solely by benzene prices, PS tabs were expected to move up. Lower feedstock costs for PVC and oversupply of PET were driving a downward trajectory for prices of those resins.
PE Prices Flat
Polyethylene prices in December were flat, although there were negotiated discounts of as much as 3¢, according to Mike Burns, RTi’s v.p. of PE markets, and PCW’s senior editor, David Barry. They estimated that PE prices in 2019 dropped 3-6¢/lb. Meanwhile, suppliers issued increases of 4-5¢/lb for January.
The Plastic Exchange’s Greenberg ventured that a price increase for January could be viable: “Demand is typically strong in January and prices usually start higher, much in contrast to a generally dismal December with its seasonal supply dump. Spot PE prices lifted a penny across the board as the New Year rang in, just as bullish market forces became more prevalent.”
While both Burns and Barry thought PE prices were bottoming out, they saw last month as flat, with suppliers aiming to implement their increases more aggressively in February and March. Both also noted that while the PE market was still oversupplied, suppliers’ year-end inventory management had contributed to a somewhat more balanced market going into 2020. Burns noted that export constraints due to the January Chinese New Year may keep inventories ample in the first quarter.
PP Prices Bottomed Out?
Polypropylene prices dropped in December by 2¢/lb, in step with propylene monomer, on top of a further non-monomer-related reduction of 3.5¢/lb, according to Scott Newell, RTi’s v.p. of PP markets. He noted that between June and year-end 2019, there were 7¢ of non-monomer-related PP price decreases, adding that the spread between PP and monomer had shrunk by 7¢/lb. According to both Newell and PCW’s Barry, most of this reduction took place in November-December, which saw significantly discounted spot deals on prime resin.
Barry and Greenberg said PP spot prices dropped 12-15¢/lb through last year. Said Newell, “When all the numbers are in for 2019, it will show that demand wasn’t so bad because these deals were so good. But I think that activity will ‘steal away’ from first quarter demand.” Both sources noted that export sales during that same time frame were also very good, which speaks to the fact that there was oversupply, or “distressed sales,” as Newell puts it. While these sources speculated that PP prices might have bottomed out, they conceded that demand was still weak, and suppliers still had 37-38 days of resin inventory on hand.
Greenberg reported that the PP spot market began to ramp back up just as the calendar turned to 2020. “There were some well-priced railcars that hung over from December and were snatched up by buyers; other processors required truckloads for quick shipment as their inventories dwindled into the year-end. Considering the uncertainty in the Middle East and new highs in crude-oil prices, which could trickle into resin, some processors have started to rebuild their inventories, citing low-cost opportunity vs. potential upside risk.”
PS Prices Flat to Higher
Polystyrene prices were flat in December after a 3¢ drop in November, but suppliers came out with a 3¢/lb price increase for Jan. 1. The move was precipitated by a 22¢/gal increase in benzene contract prices, which equated to a 2¢/lb increase on PS production costs, according to PCW’s Barry and Robin Chesshier, RTi’s v.p. of PE, PS and nylon 6 markets.
Noted Chesshier, “This is their opportunity to try to increase their margins,” noting that butadiene contract prices also rose 5¢/lb, giving suppliers some momentum. However, she noted that the rising price of benzene, which represents 75-80% of styrene monomer production cost, has had no real effect in pulling up prices of the monomer, which stood at a low contract level of 41¢/lb, with spot prices at 37¢. According to Barry, the implied styrene monomer cost, based on a 30/70 ratio of spot ethylene/benzene, was 29.1¢/lb, up 3¢/lb over a four-week period. Barry also reported that the average December 2019 spot price of GPPS was 68¢/lb railcar delivered, down 9.3¢/lb from December 2018, and average spot HIPS was 72¢/lb, down 10.7¢/lb.
Meanwhile, Chesshier noted the uncertainties cause by the major plastic price indexes CDI and IHS Markit making significant downward “non-market adjustments” to their listed prices for PS and styrene monomer, respectively. (“Non-market adjustments” are corrections to index prices when there is a disparity vs. actual market conditions.) CDI dropped its GPPS listing by 38¢/lb and HIPS by 40¢; IHS posted a 15% lower price for monomer at 13.31¢/lb. Chesshier said of the PS adjustment, “This is one of the highest non-market adjustments in 10 years. When you tell the market that posted index prices are off by that much, it causes a lack of confidence.” She saw this move as making things challenging and complicated for PS processors.
PVC Down to Flat
PVC prices were expected to sink 2¢/lb in November to January, as spot ethylene prices were dropping and contract ethylene prices were expected to settle 2¢/lb lower, which equates to a 1-1.5¢ cut in PVC production costs, according to Mark Kallman, RTi’s v.p. of PVC and engineering resins. This accompanied slowed demand and reduced production rates. Meanwhile, suppliers issued price hikes of 3¢ for Jan. 1.
Kallman saw the move as suppliers setting the stage to regain what they appear to be losing in first-quarter prices. Similarly, in her last 2019 report, PCW senior editor Donna Todd noted that suppliers were hedging their bets against the price drop with their new increase. “PVC suppliers, who have always been quick to point to ethylene pricing when they think it will help them push prices higher, will be facing a strong headwind early next year. By Dec 19, ethylene’s spot price had fallen to 15.5¢/lb, a drop of 13.5¢/lb.” She noted further pressure from Sasol’s announcement that its Lake Charles, La., cracker had undergone a successful catalyst replacement and its operating rates were already up to 85-90% of nameplate capacity and on the increase.
PET Prices Flat to Down
PET prices ended 2019 at 48¢/lb for railcars delivered east of the Rockies, down 17¢ (35.4%) since 2018, according to PCW senior editor Xavier Cronin. Prices started 2020 flat with weak demand as buyers assessed how much PET they will need over the next three months ahead of the warm-weather season, which typically brings higher demand in North America.
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