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Processors report price increases for PP and PET

By: Frank Esposito

November 29, 2012

AKRON, OHIO (Nov. 29, 1:15 p.m. ET) — North American prices for polypropylene and PET bottle resin have continued to climb in recent months.

Regional PP prices have jumped up an average of 4 cents per pound since Nov. 1, following a similar increase in price for propylene monomer feedstock. The increase marks the third straight month that PP prices in the region have headed up, following a combined increase of 3 cents per pound in September and October.

The November increase also edges PP prices for the year up a net of 2 cents per pound since Jan. 1 – an increase of about 2 percent. In addition to the influence of monomer, some buyers expressed concern that short-term outages at plants operated by Braskem Americas in Marcus Hook, Pa., and by Phillips 66 Corp. in Linden, N.J., could impact PP availability in the region. Both plants temporarily lost electrical power when Hurricane Sandy hit the U.S. East Coast on Oct. 29.

One PP buyer in the U.S. Midwest, however, questioned the reality of a possible PP shortage. “I haven’t seen one,” he said. “If there are any, it’s only because producers want to create the shortage in hopes of driving additional price increases beyond the [propylene monomer] price change.”

Another PP market watcher said that he’s seen some PP makers “have some success in margin expansion.”

Through September, U.S./Canadian PP sales were up just under 3 percent, according to the American Chemistry Council in Washington. Domestic sales growth of almost 4 percent was dampened by a 15 percent decline in export sales.

For PET, tightness in feedstock supplies have sent prices up an average of 9 cents per pound since Sept. 1. A 5-cent September increase was followed by increases of 2 cents in both October and November.

The increases – totaling almost 10 percent higher than August prices - have come as a bit of a surprise to buyers in the region, since the beverage-heavy PET market usually slows a bit during the cooler months at the end of the year. Market watchers estimated that current North American PET operating rates are around 75 percent.

The recent PET price increases mean that regional prices now are up a net of 1 cent per pound since Jan. 1 – an increase of about 1 percent. Demand growth for the year in North America is expected to be up no more than 2 percent, industry contacts said.

Plastics News also this week is showing a 1-cent upward correction on North American prices of suspension PVC. PN previously showed an increase of 2 cents per pound for that material for October, but subsequent interviews have shown that the full 3-cent increase that PVC makers were seeking went through to most buyers.

The 1-cent correction means that regional suspension PVC prices were up an average of 3 cents in both September and October. Prices now are up a net of 3 cents from their Jan. 1 levels, for an increase of about 3 percent.

U.S./Canadian PVC sales were up almost 6 percent through September, according to ACC, with domestic growth of almost 7 percent slightly lessened by export growth of more than 4 percent.