‘What’s Up…or Down’ with Commodity Resin Prices

PE and PP were on the rise, while PS held steady, PET fell and PVC was mixed.

As we approached the last week of January, resin prices for commodity resins were up, down and in between. Here’s how things were shaping up according to Houston-based PetroChemWire (PCW;) and CEO Michael Greenberg of Chicago-based The Plastics Exchange.

PE: Spot PE prices rose in the midst of tight availability, according to PCW’s senior editor David Barry, who characterized LDPE as the tightest grade, with LLDPE and HDPE as more balanced. “Cold weather along the Gulf Coast caused some units to stop running or reduce rates temporarily, although temperatures moderated toward the end of the week.”

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While a rollover appeared to be taking place for prime PE contract prices in January, PE suppliers are seeking a 4¢/lb increase, effective Feb. 1. PCW’s Barry noted that strong demand in Asia for spot PE—particularly HDPE grades, pushed the export price floor higher. Meanwhile, spot prime domestic sales were noted as healthy, with buyers aiming to complete purchases prior to the February price initiative.

Added The Plastics Exchange’s Greenberg, “Indeed, most industry participants were expecting softer prices in the New Year, so many were caught off guard [referring the 4¢/lb February price initiative]… Relatively few fresh PE railcars have been offered, and since the reseller community was generally bearish on the market, destocking efforts have also left limited spot supplies of packaged resin available.”

Greenberg also characterized the spot market’s reaction as strong, noting that both film and injection grades of LDPE and LLDPE added another 1¢/lb in the third week of the month, while spot HDPE prices, which had sprinted ahead previously held steady. “It seems that PE exports have kicked up a notch, providing  good alternative demand, which helps to keep the domestic market tightly supplier. With the 4¢/lb increase soon coming into play, we can sensibly see conditions remain tight in the near future.” 

PP: Spot PP prices kept moving higher in the third week of January as spot propylene monomer prices reached levels not seen since 2014, according to PCW’s Barry—noting that severe weather conditions caused production losses for both monomer and polymer. He also noted that PP import activity was increasing and expected domestic demand destruction to intensify next month.

PP contract prices, which moved up 1¢/lb in December in line with the monomer, were expected to fluctuate with the increased monomer costs through this month, and Barry projected  the potential for a double-digit increase. Added Greenberg, “We expect PP contracts in January to jump 10¢/lb or more due to cost-push pressures.” He characterized spot PP demand as still solid despite prices soaring with restrained domestic supplies.

PS: Prime contract PS prices appeared to have held steady this month, following the implementation of the December 5¢.lb increase, according to PCW’s Barry. “Preliminary industry data for December showed sales outpacing production by 52 million pounds, as capacity utilization fell just short of 70%. Similarly, November has a large inventory draw of 49 million pounds due to above-average sales and weak production. December PS production of 326 million pounds was the lowest since June 2016.” For February, PS prices could remain flat and perhaps even drop, depending on the benzene and ethylene prices, though some planned styrene monomer shutdowns through first quarter could hamper a reduction.

PVC: While PVC prices dropped by a total of 4¢/lb in the Dec.-Jan. time frame (more than nixing the Nov. 3¢/lb hike), suppliers were out with a new 3¢/lb price hike, effective February 1. PCW senior editor Donna Todd reported that PVC buyers appeared to be split along the “usual lines” regarding the February increase. “Pipe converters regarded it as a positive development, believing it will help them to push pipe prices higher this spring. Buyers in other downstream markets, however, were fighting the prospect of a 3¢/lb price increase with every tool at their disposal.”

Todd noted that there is frustration expressed by some non-pipe grade buyers that the predicted start dates of new ethylene crackers under construction had been pushed back. “There was 8.49 billion pounds of new ethylene capacity scheduled to come online in 2017 (some of which had been delayed from 2016). Only Oxy/Mexichem’s 1 billion lbs/yr Ingleside, Texas unit and Dow’s 3.3 billion lbs/yr Freeport, Texas units came online, as well as a 7 million lbs/yr at Westlake’s Calvert City, Kentucky unit for a total addition of 4.37 billion pounds. However, the capacity taken offline by Hurrican Harvey, some of which has still not returned to full rates, kept these additions from putting the substantial downward pressure on ethylene pricing that resin buyers had been expecting.”

PET: Domestic spot PET resin ended January’s third week at 71¢/lb bulk truck and railcar delivered Chicago area—up 2¢/lb from the week’s start, according to PCW’s editor Xavier Cronin. Meanwhile, PET contract business tied to published feedstock indexes was 2-4¢/lb lower than non-contract orders. Imported PET with an IV (intrinsic viscosity) of 78 ml/gram or higher was 68-69¢/lb DDP (delivered duty paid) East Coast and at 64-66¢/lb DDP Southern California.

Cronin also reported that Indorama Ventures USA, Asheboro, N.C., has bid about $10 million for M&G Chemical’s 360,000 m.t./yr (794 million lbs/yr) production facility in Apple Grove, W.V., and M&G’s research and development center in Sharon Center, Ohio. “The assets are for sale as part of M&G’s bankruptcy filing in October 2017. M&G’s unfinished 1.1 million m.t./yr (2.5 billion/lb/yr) PET and 1.3 m.t./yr (2.8 billion lb/yr) PTA plant in Corpus Christi are also for sale as part of the bankruptcy proceedings.”