Commodity resin prices continued to feel the heat as 2001 hit the midway mark, with prices for suspension PVC, polyethylene and solid polystyrene each dropping since early May.
The PVC market saw a price drop of 1 cent per pound in June, as buyers reported increased spot-market activity and full inventories at major pipe-making firms. The drop comes after producers successfully raised prices 3 cents per pound earlier in the year.
``There's been a lot of spot resin available for 4-6 cents [per pound] less than the average selling price,'' a Midwestern PVC processor said.
An executive at a PVC maker said the decrease did not go through to all buyers, but he admitted that producers had been more aggressive in recent weeks in their efforts to move material.
Pat Duke, an industry analyst with DeWitt & Co. consulting firm in Houston, said pipe inventories were down from where they were earlier in the year but still hadn't reached levels that would allow pipe makers to absorb the excess resin being produced.
``[PVC] producers have been reluctant to cut back on production, but they're really going to have to consider it,'' Duke said.
The picture painted by sales numbers from the American Plastics Council of Arlington, Va. is similar, showing overall PVC sales down more than 2 percent through April, with sales into pipe down almost 7 percent and sales into siding down more than 20 percent.
Surprisingly, the PVC market has not really reflected the U.S. housing-start rate this year, even though more than 60 percent of U.S. and Canadian PVC goes into the construction market. In May, housing starts surpassed their 2000 rate for the first time this year, according to the Washington-based National Association of Home Builders. But that seasonal strength was unable to lift PVC sales.
In PE, marketwide weakness continued as prices for high density, low density and linear low density PE fell 3 cents per pound in May and June. Producers now have given back 6 cents of the 8 cents in increases they had won earlier this year.
Slackening demand - with HDPE sales down 9 percent through April, LDPE down 10 percent and LLDPE down 5 percent - and abundant supply have pulled prices down, according to several buyers.
``Everyone's ordering minimum amounts,'' a major East Coast PE buyer said. ``Demand in the industrial markets weakened first, now retail is starting to weaken.''
The buyer added that the year has been tough to forecast, since a number of economic indicators - such as consumer spending - are not off as much as they typically would be given the manufacturing climate.
``In the past, these things would go up and down, now they're just sliding sideways,'' he said. ``Then you worry about going into a ditch.''
There are a few flickers of light in the PE sales picture. For example, sales of LDPE into nonproduce and nondairy food-packaging film are up almost 7 percent through April. Sales of LLDPE into shrink and stretch film are up 8 percent, while sales of HDPE into grocery sacks and T-shirt bags are up 18 percent.
The PS story still remains downcast, with U.S. and Canadian sales down 12 percent through April. Prices dropped another 2 cents per pound in May and June, bringing the year's total price drop to 3 cents. Buyers contacted saw little chance of producers being able to raise prices through the summer.
The only real bright spot for PS seems to be coming from the furniture and construction markets, where sales are up 4 percent.
``The export market [for PS] has really dried up, and that's putting more material in North America, where there was too much material to begin with,'' a Midwest PS buyer said.
