North American PP prices up 15 cents in January

By Frank Esposito
Senior Staff Reporter

Published: January 17, 2013 5:06 pm ET
Updated: January 21, 2013 9:54 am ET

Related to this story

Topics PVC, Materials Suppliers, Polypropylene
Companies & Associations Resin Technology Inc.

AKRON, OHIO -- A major price hike has hit the North American polypropylene market, sending prices up an average of 15 cents per pound since Jan. 1.

Average selling prices in the region for polystyrene also are up 3 cents per pound since Nov. 1, while suspension PVC prices in the region have dropped 1 cent per pound since Dec. 1.

The 15-cent PP increase is shown on this week's Plastics News resin pricing chart, along with a 1-cent increase for that material that occurred in December. The net change on the PN chart is an upward move of 16 cents.

The January move is the eighth double-digit price swing to hit the North American PP market since January 2011. Increased volatility has been a concern of both buyers and producers of the material.

The recent increase again was tied in to a major fluctuation in the price of propylene monomer feedstock. Propylene supplies have grown tight because of a number of planed and unplanned outages in production throughout the U.S. Gulf Coast, including a lengthy shutdown at a plant operated by Petrologistics LLC in the Houston area.

"This [increase] is all supply-related," said Scott Newell, a PP market analyst with Resin Technology Inc. in Fort Worth, Texas. "And we're now moving into the season of planned outages."

Tighter regional PP inventories also are allowing producers to gain pricing power, Newell added, pointing out that PP inventories at the processor level fell more than 200 million pounds during 2012.

An industry source said price increases of as much as 5-10 percent could be on the way in February, as supplies of both PP and propylene monomer are expected to remain tight.

Through October, U.S./Canadian PP sales were up just over 3 percent in 2012, according to the American Chemistry Council in Washington. Domestic sales growth of just over 4 percent was dampened by a 15 percent drop in export sales. Among major PP end markets, injection molded cups and containers led the way with growth of almost 23 percent.

PS prices climbed an average of 3 cents per pound in November, and producers now are working to implement a similar increase in January. The regional PS market has been rocked by sky-high prices for benzene feedstock, which topped $5 per gallon for the first time in January, with contract prices settling at $5.16. Benzene prices now are up almost 23 percent since September.

Spot benzene prices, however, were falling in mid-January, causing some buyers to doubt if the full 3 cents would stick.

"As expected, a majority of confirmed [benzene] transactions in December were above $5 per gallon, but we have yet to see if surpassing the contract benchmark of $5 has an impact on the products, traders and consumers," market analyst Jose Flores wrote in a recent research note.

"There may be some pushback at first, but we anticipate that market participants will adjust accordingly and move forward," added Flores, who is with Plaza Group in Houston. "Previous buzz in the marketplace questioned if $4 benzene could be sustainable."

North American PS demand through October had been lackluster, dropping almost 3 percent. Demand was roughly flat, however, in food packaging/food service — the largest PS end use, generating almost 60 percent of domestic sales.

"Demand for PS has been soft, so the only justification for the November increase was increased feedstock costs," RTi market analyst Greg Smith wrote in an email.

In PVC, the 1-cent drop came in December, with construction activity slowing for winter. Prior to the drop, regional PVC prices had been up about 3 percent during 2012.

The year also was good for PVC on the demand side, with U.S./Canadian sales up more than 6 percent through October. Domestic PVC sales climbed more than 8 percent in that 10-month period, with export sales up almost 3 percent.

"PVC sales are benefiting from a housing market that is showing good year-over-year growth, [and from] the start of the primary construction season for PVC pipe and siding being just around the corner and strong PVC export opportunities," market analyst Phil Karig wrote in an -mail.

"With all of these things going for them, PVC producers should be in the driver's seat until construction starts to slow down in the fall," added Karig, who is chairman of Mathelin Bay Associates consulting firm in St. Louis.

And in the PE market, producers and buyers are battling over a 5-cent increase attempt that was scheduled for Jan. 1. Outages also could play a role there, according to Karig.

"Export demand has been reasonably good for PE and producer resin inventories are low, but the main driver of PP and PE pricing right now is the large number of refineries that are currently experiencing production disruptions," he wrote. "The greater-than-anticipated number of outages, and the fact that they were multiple and sudden, has hardened producer resolve on the 5-cent Januasry PE increase and caused some buyers to scramble to get ahead of the second PE increase [4 cent] on the table for February by buying even more resin."

He added that such a tactic, however, "while potentially favorable for an individual processor that can stock resin in advance of a price increase, only serves to make it more likely that the increase will actually occur on schedule."

During 2012, PE prices, based on dairy blow molding grades of high density PE, were down 5 percent, according to the PN pricing chart.


Comments

North American PP prices up 15 cents in January

By Frank Esposito
Senior Staff Reporter

Published: January 17, 2013 5:06 pm ET
Updated: January 21, 2013 9:54 am ET

Post Your Comments


Back to story


More stories

PetStar doubles capacity at Mexico recycling facility

July 24, 2014 2:10 pm ET

Mexican recycling giant PetStar SAPI de CV, owned by the System of Coca-Cola Bottlers in Mexico, has doubled the capacity of its facility to 130...    More

Meredian merging with Danimer Scientific

July 24, 2014 1:59 pm ET

Bioplastics maker Meredian Inc. is merging with its sister firm, Danimer Scientific LLC.    More

Image

US Bioplastics receives funding to bring Gatoresin to the market

July 24, 2014 1:44 pm ET

Materials maker U.S. Bioplastics is hoping its Gatoresin product will take a bite out of the bioplastics market, thanks to funding from a state...    More

Image

Prices trending up for some recycled resins

July 24, 2014 1:27 pm ET

Plastics News is correcting prices for recycled grades of several commodity resins on this week's resin pricing chart.    More

Image

Injection molder, recycler Polyvulc USA puts itself up for sale

July 24, 2014 12:41 pm ET

Fred Farrell and Larry Lambiotte, founders of Polyvulc USA Inc. and its subsidiaries Polyvulc Tire Recycling Llc and Winnsboro Rubber Recycling LLC, a...    More

Market Reports

Injection Molders Market Report & Ranking 2014

This special package contains our 132-page 2014 Market Report on the Injection Molding segment and our exclusive 2014 RANKINGS database of 500+ Injection Molders for a discounted package price.

Learn more

Plastics Recycling Market Review & Outlook 2014

This special report from Plastics News examines the North American plastics recycling industry and provides insight into indicators that impact market viability, including Resin pricing trends for virgin and recycled market material and historical Resin production trends for post- consumer and industrial waste.

Learn more

Shale Gas Market - Analysis of North American Region

This report highlights the impact of shale-based natural gas on the North American plastics market and features an in-depth analysis of production trends in the United States during 2013 and a forecast for 2014 and beyond.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events