Upwards Movement for Commodity Resin Prices

Still, “iffy” on how much of various price initiatives will be implemented as we move to year end.

As the third week of the first month of the fourth quarter approached, suppliers of commodity resins continued in their attempts to increase prices, and the degree of their likely success was somewhat up in the air, according to weekly reports from Houston-based PetroChemWire (PCW). Take a look at a rundown of current pricing and supply trends for polyolefins, PS, PVC, and PET:

PE: On the contract front, suppliers continued to implement a 4¢/lb increase (effective mid-Sept. or Oct.1). Most were also implementing a 3¢/lb increase (effective mid-Oct.), though two suppliers were holding off on implementation till Nov. 1, according to PCW’s senior editor Dave Barry. Both increases followed the late Aug. 3¢/lb increase—for a total of 10¢/lb. Interestingly, though, spot PE prices remained largely flat, with some weakness in wide-spec pricing. Barry characterized domestic spot buying interest as limited as there is now an anticipation of either flat or lower prices ahead. Moreover, supplier inventories in the post-Harvey recovery appear to now be at or ahead of what was expected.

Tight supply for both blow molding grade HDPE and copolymer injection molding HDPE are still tight, but availability of all other grades saw a steady improvement. For example, crate HDPE grade reportedly is becoming abundant. CPChem’s new Old Ocean, TX plant has started up on that grade, and the new Ineos-Sasol unit in LaPorte is soon expected to start up on crate grade production. Meanwhile, ExxonMobil is said to be producing butene LLDPE at one of its two new Mt. Belvieu reactors, while Dow is said to be packaging prime mLLDPE out of its new Freeport reactor for export.

Other operations news cited by PCW include news that Nova Chemicals has restarted gas-process PE units at its Joffre, AB plant, following a planned maintenance shutdown that started in early September. Reports about CPChem included restart of its Cedar Bayou on-purpose 1-hexene comonomer plant by the end of October, and PE units at the site may be restarted as early as mid-November. First to come on line is expected to be the joint venture blow molding HDPE unit, followed by gas process trains and autoclave LDPE units. Meanwhile, ExxonMobil has started up the first of two new mLLDPE units (each with 1.4 billion/lb/yr capacity) at its Mont Belvieu facility. Like Dow (mentioned above), ExxonMobil has said that a major portion of the new material will be exported from Houston by month’s end. Finally, the Ineos-Sasol HDPE joint venture in LaPorte was slated for startup this week.

PP: On the contract front, PP prices were expected to follow the October propylene monomer contract price, which had yet to be settled. According to PCW’s Barry, market talk was on the possibility of either a rollover or a small move one way or the other. One PP supplier announced a 3¢/lb increase, effective Nov. 1 in addition to any change in the monomer. “This increase is similar to price initiatives previously announced by other suppliers, and there were reports that at least part of those increases was implemented.”

Interestingly, spot PP prices declined as there were continued supply improvements but with low spot buying interest. Still, Barry noted, spot availability was not widespread, and he characterized the market as balanced to tight. “Prime demand appeared average, but there were concerns of a slowdown in Nov.-Dec. after end users overbought during Sept.-Oct. in response to post-hurricane supply concerns. The recent decline in monomer spot prices was also feeding perceptions that PP prices have peaked.”

In operation news, no new outages were reported while both LyondellBasell and Ineos still had their force majeure declarations in place in the aftermath of Harvey.

PS: On the contract front, PS suppliers were aiming to implement the second consecutive 3¢/lb increase in Oct. Meanwhile, spot PS prices were flat to slightly higher, while availability appeared to be adequate to meet forecasted demand, according to PCW’s Barry. In the domestic resale market, generic prime ended the week 0.5¢/lb higher on average at 80-82¢/lb railcar delivered. Generic prime HIPS was flat at 86-88¢/lb railcar deliveries. Imported prime HIPS in supersacks continued to sell in the upper 70s-to-low 80s¢/lb delivered based on older inventories.

PVC: On the contract front, PVC prices settled flat in September as there was neither a price hike on the table nor was there downward pressure in the market due to Hurricane Harvey’s interruption of ethylene and PVC production during the month. As a result the pipe grade net transaction price (NTP) remained at 41-45¢/lb and general-purpose grade NTP held at 45-49¢/lb, according to PCW senior editor Donna Todd. “Prices have been flat since the March contract price settles at the end of April, or a total of seven months with static pricing. The last time prices held at the same level for a significant length of time was back in 2014, when pricing held steady for six straight months.”

According to Todd, buyers and sellers anticipated having a better gauge this week on the degree of success PVC suppliers would have in implementing their Oct. 5¢/lb increase. “PVC suppliers remained confident that at least 4¢/lb of the hike will be successful, and flet they had an excellent chance to achieve the entire 5¢/lb.” Todd noted that force majeure declarations by Formosa and OxyVinyls were still in effect that the market remained somewhat tight.

PET: Prices for domestic bottle-grade prime PET prices were up 2¢/lb driven by tight supply concerns as a result of the absence of PET anytime soon from the Jumbo PET plant under construction at Corpus Christi, Texas by M&G Chemicals, according to editor Xavier Cronin. Construction of the nearly 85% completed production facility was suspended last month with no indication of when it might be operating. All of Jumbo’s PET was slated for the U.S., with the most recent target of fourth quarter 2017 after several delays since 2016.

Cronin also reported that a slowdown in PET imports from Mexico over the last month has tightened the spot market. “Spot business by week’s end was down at 73¢/lb delivered east of the Rockies, with monthly contract business tied to feedstock prices 2-5¢.lb lower.”