PP prices up 5 cents in Aug., PE prices remain flat

By Frank Esposito
Senior Staff Reporter

Published: September 5, 2013 1:58 pm ET
Updated: September 5, 2013 2:17 pm ET

Related to this story

Topics Polyethylene, Materials Suppliers, Polypropylene
Companies & Associations American Chemistry Council

AKRON, OHIO — Polypropylene buyers are worked up because something is happening, while polyethylene buyers are worked up because nothing is happening.

Welcome to the North American resin market!

Regional PP prices moved up an average of 5 cents per pound in August, according to buyers contacted by Plastics News. Prices had moved up an average of 3 cents per pound in June. But even that combined 8 cents is not enough to push PP pricing into positive territory for the year. Through August, regional PP prices are down a net of 3 cents.

"We're looking at continued price volatility for polypropylene until new propylene monomer capacity comes onstream in 2015," said Robert Bauman, president of the Polymer Consulting International consulting firm in Spring, Texas.

Through April, North American PP sales were down more than 5 percent, according to the American Chemistry Council in Washington. A domestic sales drop of almost 4 percent was worsened by a plunge of more than 37 percent in export sales.

"Export sales are low, and there's maybe 10-15 percent of polypropylene production capacity that's underused," Bauman said of current market conditions.

In PE, it's fair to say the silence is deafening. North American prices have been flat since May. That's the first time regional prices have gone three months without moving since late 2009, and only the second time it's happened since mid-2000, according to the Plastics News resin pricing chart.

"Operating rates [for PE] are high, but when prices are flat, people aren't out there pre-buying," a resin buyer in the Southeast U.S. said. "Demand for ethylene is balanced, so that's stopped [PE] prices from going up, and export markets are still available to balance out supply, so that's stopped prices from going down."

A Texas-based PE buyer added that PE makers' profit margins "are phenomenal right now, so buyers have been resisting any attempt to raise prices."

Buyers successfully fended off price hikes of 2-4 cents per pound in August. PE makers now are pushing for a 5-cent hike effective Sept. 1, with some nominating a 6-cent hike for Oct. 1 as well. PE makers' profit margins have been boosted by low prices for natural gas, which is used to make ethane feedstock. Shale gas discoveries and development have made North America the world's second-lowest cost region for PE production, trailing only the Middle East.

Buyers and market watchers said that although some of the September attempt might stick, they also expect prices to recede a bit later in the year. Maintenance turnarounds and ethylene outages seen earlier in the year — which also helped to keep regional PE supplies tight — mostly have been dealt with.

PE makers "basically are happy with what they have in margin and they're happy they're not getting a decrease in [resin] price," said Phil Karig, managing director of the Mathelin Bay Associates LLC consulting firm in St. Louis. He added that potential U.S. military involvement could affect PE pricing if it causes the global price of oil to spike. North American PE prices remain influenced by oil, even though natural gas is more often used as a feedstock in the region.

Even with three months of flat pricing, earlier increases have left regional LDPE and LLDPE prices up an average of 9 cents per pound so far in 2013, with regional HDPE prices up an average of 11 cents.

PE makers "were able to get prices high because there's a global floor for pricing, and because they can move product overseas," said Mike Burns, a PE market analyst with the Resin Technology Inc. consulting firm in Fort Worth, Texas. Producers' inventory levels "have been low across the board" in 2013, which also has affected the North American market, he added.

Through April, U.S./Canadian HDPE and LDPE sales each were up more than 6 percent, according to ACC, while U.S./Canadian LLDPE sales were up more than 3 percent. Sales of HDPE and LDPE were boosted by gains of more than 20 percent in export sales.


Comments

PP prices up 5 cents in Aug., PE prices remain flat

By Frank Esposito
Senior Staff Reporter

Published: September 5, 2013 1:58 pm ET
Updated: September 5, 2013 2:17 pm ET

Post Your Comments


Back to story


More stories

Image

Sabic: Rapid demand growth led to Ultem shortage

December 18, 2014 12:06 pm ET

Sabic Innovative Plastics has been increasing production capacity for its Ultem polyetherimide but it still got caught short by increasing demand for ...    More

Image

Plastics News Now: Polystyrene helps spur honey production

December 18, 2014 6:00 am ET

Bee farmers are crediting polystyrene with an increase in honey production, plastic toymakers lament shipping delays and plastic bag ban backers are...    More

Image

Bubbles add some flair to 'Plain Jane' PET bottles

December 17, 2014 1:05 pm ET

Ron Puvak and the folks over at Plastic Technologies Inc. see big things coming from some very tiny bubbles.    More

McCann expanding in Ohio

December 17, 2014 11:59 am ET

Compounding firm McCann Plastics will spend $1.2 million on an expansion project that will create 15 new jobs at its plant in Green, Ohio.    More

Image

Shipping slowdowns add to season's stress

December 16, 2014 4:02 pm ET

Toy companies know what they want for Christmas: an end to crippling shipping delays at West Coast ports.    More

Market Reports

Flexible Packaging Trends in North America

Our latest RESEARCH report examines trends in FLEXIBLE PACKAGING impacting the North American market including a review of economic conditions, key drivers of growth, materials pricing, M&A activity, sustainability challenges and the outlook for 2015.

Learn more

Plastics Recycling Trends in North America

This report is a review and analysis of the North American Plastics Recycling Industry, including key trends and statistics based on 2013 performance. We examine market environment factors, regulatory issues, industry challenges, key drivers and emerging trends in post-consumer and post-industrial recycling.

Learn more

Plastics in Mexico - State of the Industry Report

This report analyzes the $20 billion plastics industry in Mexico including sales of machinery & equipment, resins and finished products.

Our analysts provide insight on business trends, foreign investment, top end markets and plastics processing activity. The report also provides important data on exports, production, employment and value of plastics products manufactured.

Learn more

Upcoming Plastics News Events

January 14, 2015 - January 14, 2015Plastics in Automotive

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

June 2, 2015 - June 3, 2015Plastics Financial Summit - Chicago 2015

September 16, 2015 - September 18, 2015Plastics Caps & Closures - September 2015

October 27, 2015 - October 29, 2015Plastics Financial Summit - New York - 2015

More Events