Prices of Six Volume Resins Flat-to-Down

Upward pricing for PP, PET, nylon 66 is in contrast with the other six volume resins.

By mid-June, prices of six volume resins—PE, PS, PVC, ABS, PC, and nylon 6, appeared to be on a flat-to-down trajectory, owing to lower prices of some key feedstocks coupled with improved supply-demand balance circumstances. In contrast, tight supplies of other feedstocks and their intermediaries along with higher prices have resulted in an upwards pricing trajectory for PP, PET, and nylon 66. This according to purchasing consultants Resin Technology Inc. (RTi), PetroChemWire (PCW), and Michael Greenberg, CEO of the Plastics Exchange. Here’s a glimpse at each.

● PE: Prices last month were a mixed bag for the first time in quite a few years. Two suppliers reportedly offered a decrease of 3¢/lb for LLDPE, with prices of all other resins flat. Making things more complicated, Dow announced a 4¢/lb increase for June, while other suppliers postponed their 3¢/lb price hikes (which originated for March implementation) into this month. Mike Burns, RTi’s v.p. of client services for PE, for one, ventured June prices would be flat, with a good chance that trend could continue into this month and beyond. A false demand surge as a result of hurricane season inventory buildup by buyers could promote higher prices.

Secondary markets also saw this flat trend with PCW’s senior editor Dave Barry reporting spot PE prices as mostly unchanged amid sluggish trading activity by the end of June’s first week. The Plastics Exchange’s Greenberg reported that while the market has been awash in butene LLDPE and injection HDPE, film and injection grades of LDPE were more difficult to source, at least at prices agreeable to processors.

● PP: Prices moved up in May in step with propylene contracts by 5¢/lb and by another 2¢/lb in suppliers’ margin expansion. With spot monomer prices surging by as much as 6-7¢/lb,  industry sources expected another PP price hike for June. “We see June prices going up 5¢/lb or more, in step with propylene contracts,” says RTi’s v.p. of PP markets Scott Newell.

Newell ventured that July PP prices could be flat, and hopefully down, if June proves to be the peak for the propylene tightness. “I think there could be a lot of demand destruction for PP if these prices are sustained…expect to see imports increasing.” He says demand for PP starting in April was generally good, after lagging for 6-7 months. PCW’s Barry reported spot PP prices as flat-to-higher as supply remained tight due to strong domestic demand as well as two unplanned and one planned outages. Similarly, Greenberg characterized the spot market as challenged by scarce supplies and rising prices. “We have been vocally bullish on PP for some time as supply/demand dynamics have been too tight to withstand disruptions—we still remain bullish for now.”

● PS: Prices dropped 4¢/lb in May, and RTi’s v.p. of client services for engineering resins, PS and PVC Mark Kallman ventured flat-to-slightly upward movement in the June-July time frame. At the same time, he suggested more upwards pressure in August, due to stronger demand for PS during the traditionally strong season, including some pre-buying due to the hurricane season, and some tightness developing from the benzene/styrene monomer chain. Going into June, PCW’s Barry reported spot GPPS and HIPS prices were down 4-5¢/lb after peaking in early April. Feedstock costs were steady, with the implied styrene cost formula (based on 70% spot benzene/30% spot ethylene) flat at 32.6¢/lb.

● PVC: Prices were flat in May driven by very low ethylene costs with another 2-3¢ likely to come off which would reduce the cost of making PVC to 1-1.5¢/lb, according to RTi’s Kallman. However, spot ethylene prices that had bottomed out to 12¢/lb were up 3.25¢/lb by end of May. PCW’s senior editor Donna Todd reported that late-settling April ethylene contracts settled down 1.5¢/lb at 26.75¢/lb and May contracts settled down 0.75¢/lb to 26¢/lb. Both Todd and Kallman noted that suppliers’ stance was that the low ethylene prices cannot be sustained, and that domestic demand picked up nicely in April-May as did exports with this trend continuing into June and third quarter

● PET: PCW’s senior editor Xavier Cronin reported domestic bottle-grade PET prices rose in May by 3-5¢/lb to the mid-70 ¢/lb range delivered Midwest, driven by rising crude oil and PET feedstock prices. Average U.S. PET feedstock costs in May were up by 2.4¢/lb to 61.28¢/lb, from April, according to one calculation used by large-volume PET suppliers and buyers to invoice May deliveries. PCW ventures prices of PET (prime, offgrade and rPET) are likely to increase by another 1-3¢/lb in the June-July timeframe driven by the packaging sectors due to ‘skyrocketing’ consumption of carbonated soft drinks and bottles water. This projected price increase also assumes that crude oil prices will rise or stay at current elevated levels.

● ABS: Prices remained fairly stable through second quarter, following the 5¢/lb increases in January. Suppliers’ efforts to push through price hikes of 6-7¢/lb failed as feedstock prices retreated and competition from ABS imports were lower, according to RTi’s Kallman. Characterizing the market as currently more balanced, he ventured continued flat pricing at least through June, depending on demand, with some upward pressure potential in late third quarter. 

● PC: Prices were generally flat through second quarter following the implementation of January increases of up to 14¢/lb, with independent compounders and secondary suppliers, implementing similar increases in the February-March time frame, according to RTi’s Kallman. There were some new price increase attempts announced for May, related to distribution channels and smaller compounders, but implementation was at best mixed, with Kallman characterizing overall PC pricing as steady. He ventured PC prices would largely remain flat through third quarter.

● NYLON 6 FLAT; NYLON 66 UP: Nylon 6 prices remained flat from March through May, as benzene prices bottomed out at $1.90/gal, and moved up to only $1.96/gal in May, according to RTi’s Kallman. Potential for some upward pressure is possible this month, as benzene oversupply will be over and prices could firm up. Too, nylon 6 plants are operating at high rates as there is increasing industry talk for replacement of nylon 66 due to the latter’s higher prices.

Meanwhile, nylon 66 prices were largely flat through May, after moving up 15-20¢/lb in first quarter, driven by a global market that became very tight. according to Kallman. “We had seven force majeure actions on intermediates—mostly in Europe, though first quarter and into the second. Recovery will be long—supply is tight domestically and much tighter in Europe and Asia. He anticipates upward pricing pressure as we move through third quarter due to the tightness and possible higher butadiene and propylene prices.