AKRON, OHIO—Resin processors throughout the United States and Canada are reporting that prices for all grades of high, low and linear low density polyethylene, as well as polypropylene, dipped an average of 2 cents in September.
These decreases, which were confirmed by a pair of industry analysts, are reflected in Plastics News' resin pricing chart.
``Supply is extremely good,'' said a Rhode Island-based LDPE and LLDPE buyer. ``There's a lot of resin available and no backlog of orders.''
However, an official at a major HDPE maker cautioned that the softening may not have been seen in all material grades. The official also pointed out that October traditionally is a strong sales and production month for the industry.
Buyers in Illinois, New York, Indiana, Ontario and Quebec were among those reporting the downturn. A Chicago-based buyer of HDPE, LLDPE and PP cited lower ethylene prices and softer demand as reasons behind the PE move. The buyer predicted that PP may have ``bottomed out'' on the price front, but that another 2 cent drop in PE in October could cause the market to go into free fall for the rest of the year and into 1998.
``There's no price pressure on ethylene,'' the buyer said. ``And polypropylene has outstripped the strength and growth it's seen by adding new capacity.''
Donna Todd, a consultant with Phillip Townsend Associates Inc. of Houston, said an expected 1 cent drop in ethylene prices later this month could play a prominent role in the pricing scenario. New ethylene capacity brought on recently by Chevron Corp. — and additional capacity expected soon from Westlake Corp. and Exxon Chemical Co. — are affecting the market for that vital feedstock, according to Todd.
Len Azzaro, PE business director for Dow Chemical Co. of Midland, Mich., agreed prices have slipped since midsummer, but he added that the perception of new capacity is not enough to affect current pricing. Azzaro repeated a previous claim that recent price softening is tied to buyers ridding themselves of excess inventory.
``Ethylene prices haven't moved and we've got this terrible rail car situation in Houston that's affecting shipments.'' Azzaro said in an Oct. 21 phone interview from Midland. ``Inventories are really low and customers aren't getting all they want. There's no reason for the drop in prices.''
In PP, officials at market leader Montell Polyolefins of Wilmington, Del., conceded that 4-5 cents had come out of the market since midsummer. But Gerald Ferris, North American business planning manager, said buyers ``might be overreacting'' to the short-term situation in new capacity that came on in the summer and added to oversupply.
``The growth we've seen in domestic sales, which are up 7 percent, might make for an interesting marketplace in 1998,'' Ferris said Oct. 21 from Wilmington. ``Material might be tight in the first quarter and on into the second quarter.''
Ferris added that market factors have led Montell to anticipate PP prices will stabilize in October and November.