Pushed ahead by high raw material costs and rising consumer demand, prices for polypropylene, solid polystyrene and suspension PVC resins all increased in March.
``Resin prices are continuing to escalate,'' said Craig Blizzard, marketing director for PP leader Basell Polyolefins of Elkton, Md. ``We're trying to keep up with monomer [price increases].
``Our core customers are going like gangbusters. They're voting with their purchase orders.''
The March increase was the third consecutive 3 cent-per-pound move absorbed by PP buyers. Industry contacts said first-quarter PP demand in the United States and Canada was up 5 percent over the same period in 2003. Craig Fisher, a market analyst with Phillip Townsend Associates Inc. in Houston, said first-quarter PP growth may have been as high as 8 percent.
High prices for crude oil are putting PP under pressure, since half of the propylene monomer needed to make PP in North America comes from oil refineries, sources said. Spot prices for West Texas intermediate crude were almost $37 a barrel April 14, up more than 20 percent from the same date a year ago.
One Midwestern PP buyer said PP prices could climb higher still, with a 5 cent move on the table in April and a 3 cent hike on tap for May.
Even with the increases of 2004, PP ``still is a bargain compared to other commodity resins,'' the buyer said.
Fisher said pressure for higher PP prices could continue through April before slowing down some. Propylene monomer prices stayed flat in April, which Fisher said was the result of supply ``loosening up quite a bit,'' with cracker units coming back up and spot prices slipping.
Selling prices for solid PS were prodded higher by 3 cents per pound in March, with much of the increase owing to sky-high prices for benzene feedstock. Per-gallon benzene prices jumped more than 40 percent between November and March, contacts said.
Benzene prices went out of control in early April, with spot prices exceeding $3 per gallon before settling at $2.35 - a level 30 percent higher than April 2003.
Since Jan. 1, prices for solid PS in North America are up an average of 11 cents per pound - almost 20 percent.
PS makers expect U.S./Canadian demand growth of as much as 3 percent in 2004 after watching sales drop 4 percent in 2003. First-quarter 2004 sales were up as much as 4 percent, according to Jeff Denton, North American PS marketing manager for Dow Chemical Co. in Midland, Mich.
``Food service, food packaging, durables like large appliances, and even the TV market have shown strength,'' Denton said. ``There's some very positive demand strength out there.''
The PVC world has been buffeted by high prices of not only crude oil, but also of natural gas, which is used to make 70 percent of North American ethylene feedstock. Natural gas was trading April 14 at $5.90 per million Btu, about 6 percent higher than the year-ago level and well above the sub-$4 prices the market enjoyed throughout the 1990s.
As a result, North American suspension PVC prices went up an average of 2 cents per pound for the third consecutive month in March. Pipe-grade resin prices now are up an average of 15 percent since Jan. 1. PVC makers expect U.S./Canadian PVC demand - which was down 2 percent in 2003 - to rebound and post a 4 percent gain in 2004.
Buyers said the construction market, which accounts for about 60 percent of U.S./Canadian PVC use, remained solid in March as it ramped up for its busiest building season. Another 2 cent increase has been nominated for April by most major PVC makers.
Pipe inventories are relatively balanced, according to a Midwestern PVC buyer.
``Housing could even slow down and we'd be OK on [PVC] pipe demand for a while,'' he said. ``There hasn't been much overbuying on pipe.''
The total number of U.S. building permits was up 5 percent in the first two months of 2004 compared with the same period a year ago, according to the National Association of Home Builders, in Washington.
In an April 15 news release, NAHB chief economist David Seiders said the group expects the demand for single-family homes in the United States to remain ``quite strong'' in 2004, despite the rise in long-term mortgage rates, because of growth in employment and household income.