Resin Pricing Update as October Approaches

Firm pricing indicated by PCW & The Plastics Exchange

Let’s take a look at resin pricing in the last week of September, as reported by PetroChemWire (PCW) and Plastics Exchange, The. One thing for certain, prices are firm at best if not on the way to spiking.

PE: Spot market PE prices were firm with a scarcity of material expected to persist for at least another two weeks. This according to PCW Senior Editor Dave Barry who also stressed that supply issues were concentrated on blow molding HDPE, injection molding HDPE and LLDPE hexene grades, including mLLDPE. “The outage at Cedar Bayou, expected to last well into 4Q, was creating shortages of butene and hexene comonomer, but they were being addresses at least partially by imports, including LLDPE hexene, due to start arriving in October.”

Michael Greenberg, CEO of The Plastics Exchange, characterized spot PE buying as relaxed with spot material in very short supply and prices elevated. “Although producers’ post-hurricane operations have been ramping up, the lost production due to the storm has created a short/mid-term supply/demand imbalance, which supports the current price increase effort. With the implementation of the August 3¢/lb price hike a done deal, suppliers were all out with a 3¢/lb increase, effective either Sept. or Oct. 1. There were at least four suppliers who are calling for an additional 3¢/lb increase, effective Oct. 15.” Said Greenberg, “As such, we think 7¢/lb will take hold, with a good chance for a total of 10¢/lb. We do see these increases peeling back off some time in the future.”

PP: Spot market PP prices were generally firm, with some indications of improving availability, both of prime and wide-spec material, reported PCW’s Barry. He noted that there was market talk focused on the potential of significant propylene monomer-driven price increases. “While PP capacity has largely restarted after Hurricane Harvey, it was unclear if plants were able to run at full throttle. A number of factors were limiting propylene supply, including refinery and cracker outages. There was concern that high PP prices were leading to demand destruction, but the effects were not yet visible because of supply limitations.” Suppliers continued to implement their 3¢/lb September increases in addition to monomer-based price changes, he noted.

Greenberg reported that spot PP prices held steady after a sharp five-week rally, which added a hefty 16.5¢/lb—levels that took spot from a discount to a premium, pushing some buyers to the sidelines. “Still, these spot levels are a very good indication of what price the market can bear, and with a sizable PGP cost push increase imminent, PP contracts can catch up quickly. We expect a total increase in the vicinity of 10¢/lb to implement for PP contracts during Aug./Sept.; attributing 7¢/lb for monomer and 3¢/lb for margin.”

PS: Spot PS prices were mixed amid balanced supply, according to Barry. In addition to the 3¢/lb increase being implemented in September, two suppliers had issued a 3¢/lb increase, effective Oct. 1. He noted that in the domestic resale market, generic prime prices were unchanged from the previous week, though they were up 3¢/lb from a month ago.

PVC: Senior Editor Donna Todd reported that August PVC contract prices settled flat. This left the net transaction price for pipe grade at 41-45¢/lb and for general-purpose grade at 45-49¢/lb. As previously reported, there were no price increase attempts for either August or September, but all suppliers are out with a 5¢/lb increase, effective Oct. 1. “They have no doubt that the full 5¢ price hike will be implemented, in light of the large uptick in spot ethylene prices since the market bottomed out in July and the tightness in the PVC market caused by Harvey-related plant outages.” She noted that the major unknown is the ethylene contract price, for which there was no August settlement and a two-month Aug.-Sept. settlement was not expected to occur until the end of September.  

PET: PCW Editor Xavier Cronin reported that spot bottle grade PET resins closed the week at 68-69¢/lb railcar delivered Chicago, unchanged from the previous week. October PET resin was at 70¢/lb as supply was tight due to missed delivering by a PET producer, according market sources.

Meanwhile, a “glitch” has occurred with regard to the startup of the world’s largest PET plant—M&G Chemical’s Project Jumbo in Corpus Christi. PCW was told by a company spokesman that they could not comment on their financial situation or the future of their businesses at this time, and they would make public statements when all assessments are finalized.

In fact, the company said it was halting work on the plant and was working with its contractor Fluor to provide a safe and smooth closure to activities at the site. The company’s financial issues include alleged non-payment of $49 million to Mexico’s chemical giant Alpek. As a result, Alpek has suspended PTA feedstock deliveries to M&G’s PET plants in Mexico and Brazil, claiming non-payment. According to Cronin, Alpek has right to 500,00o mt/yr of Jumbo’s PET production, which has a targeted capacity of 2.5-billion lb/yr of