PP Bucks Flat-to-Down Trend for Commodity Resin Prices

Driving the general trajectory are lower cost feedstocks, improved monomer and polymer availability, and slowed exports, depending on the resin.

By the end of April, one week away from NPE2018, it appeared that prices of four large volume commodity resins were on a flat-to-downward trajectory. Once again, the exception might still be PP, which after a double-digit dip, may move up a bit. This owing to a bit of a slide in propylene monomer but mostly due to suppliers’ intent to push through an expansion margin increase of 3-5 ¢/lb—a move initiated back in March. This according to purchasing consultants Resin Technology Inc. (RTi), PetroChemWire (PCW), and Michael Greenberg, CEO of the Plastics Exchange.

PE: Prices were flat in April, as suppliers unsuccessfully bid to implement their March 3¢/lb price hike, with at least one pushing it up to May 1—this as there was market talk of downward pricing last month. Mike Burns, RTi’s v.p. of client services for PE, for one, ventured that May PE prices would likely drop 2-4¢/lb.

PCW’s senior editor David Barry reported PE spot prices as flat-to-lower, and characterized supply as balanced for most grades, except for certain LDPE and HMWPE film grades. Also, he said domestic spot buyers were inactive, but that underlying demand was good. The Plastics Exchange’s Greenberg put it this way, “Buyers were quiet, sensing no real threat of rising prices as suppliers pushed off their April increase, shading doubt upon any success in May.” Both PCW and Burns noted that PE plants were operating at good rates—low 90s percentile—with inventories building as a result.

 “Overall, I don’t think a price hike can be achieved for the rest of the year, barring oil prices spiking significantly--10-15% or about $7-10/bbl above current prices, false demand in the third quarter due to per-hurricane season, or actual hurricane production disruptions,” summed up Burns.      

PP: Prices in April generally were flat-to-down 1¢/lb in step with propylene monomer contracts. Though some industry sources reported a 1¢/lb margin expansion increase at some accounts, RTi’s v.p. of PP markets Scott Newell maintained that this by far was not marketwide, and said he saw April PP prices dropping by 1¢ with the monomer in most cases.

PCW’s Barry reported spot PP prices as higher amid tight supply and healthy demand. Similarly, Greenberg reported high activity at the end of April, venturing that buyers were recognizing upwards pressure in contract pricing and aimed to secure material beyond their current needs. All three sources reported that spot monomer prices had begun to move up due to planned and unplanned outages that have kept things snug. Newell ventured that May monomer contracts had the potential to settle up 1-2 ¢/lb.

As for PP, Greenberg ventured that some of the 3-5¢/lb margin expansion increase will likely take hold within second quarter—this despite a steady flow of fresh offers seen on the spot market. Newell ventured that in addition to the potential monomer increase, PP suppliers could get a 1-2¢ margin expansion in May.

Said Newell, “The market is not loose but it’s not too tight either, and the numbers simply do not show the purported tightness.”  Plant operating rates in first quarter were only at 84-85%, yet with a supplier inventory buildup of 70 million lb. PP imports have also been above average since Hurricane Harvey, so that accounts for a piece of the domestic demand taken away. He saw first quarter at about 1.2% domestic negative growth. He noted that days of supplier inventories are a well-balanced 31.3 days.

PS: PCW’s Barry reported PS spot prices as steady amid light trading activity. Supply was balanced and in the last week of April, Total Petrochemical removed its force majeure declaration for PS which had been in place since January 23rd. PS suppliers implemented increases totaling 6¢/lb in the February-March time frame, and April prime market prices were said to be holding at March levels. However, PS feedstock costs have since fallen. Styrene spot prices have returned to early January levels, benzene has retreated from the $3.10-3.10/gal in January to $2.90-3.00/gal. range in April. And, ethylene has plummeted from around 27¢/lb in early January to 13¢/lb in the last week of April

PVC: PCW’s senior editor Donna Todd reported that PVC suppliers had good news and bad news by the end of April from a market pundit. On the plus side, the success of the March 2¢/lb increase was confirmed. On the other hand, the 2¢/lb hike was predicted to come back out of the contract price for April. Falling ethylene prices and dropping PVC export numbers were said to be the reason for the quick turnaround in resin pricing.

According to Todd, pipe converters had been supportive of both the February and March price hikes in the expectation that they, in turn, would be able to push up pipe prices. In contrast, those not in the pipe side of the business, said the March 2¢/lb increase should never have been implemented as both ethylene prices and PVC export prices had been dropping back in March.