Polyethylene prices have continued their conflicted ways in recent months, while prices for suspension PVC and polypropylene maintained their upward climbs in April.
After winning 4 cents in per-pound increases earlier in the year, PE makers gave back 3 cents of that in March and April. The erosion occurred as pre-buying slowed and processors worked off existing inventories, according to a number of PE buyers and sellers contacted recently.
But in roller-coaster fashion, that erosion has been followed by a hammerlike effort that has seen PE makers lift prices an average of 5 cents per pound since May 1. Sustained highs in feedstock costs - natural gas was at $6.19 per million Btu as of May 12 - have reignited PE prices after the earlier erosion.
The result is a net upward change of 2 cents per pound on all PE prices on the Plastics News resin pricing chart.
``The [first] increase was wiped out,'' a Midwestern PE buyer said. ``Then, when the 5 [cent increase] was announced, oil and gas looked to be backing up. But now oil is over $40 [per barrel] and natural gas is still above $6.''
``Demand is good, but it hasn't set records and it hasn't been enough on its own to drive a 5 cent increase.''
A West Coast PE buyer suggested that consistently high resin prices - up more than 20 percent since the start of 2002 - may be discouraging some manufacturers from switching their products into plastic. The buyer cited pet-food containers as an area where conversion may have been affected by inflated resin costs.
PE sales numbers for the first two months of 2004 were discouraging - sales of high, low and linear low density PE each were down at least 9 percent, according to the American Plastics Council in Arlington, Va. But producers said those numbers are somewhat skewed because the first quarter of 2003 was abnormally strong.
Producers also are not seeing the second-quarter sales drop-off that occurred in 2003.
``We've already seen better April numbers than we saw in 2003,'' said Mark Kay, PE marketing director for Nova Chemicals Inc. in Pittsburgh.
``Food packaging continues to look good. It's been a bright spot for some time. That segment weathers storms in the economy very well.''
In PVC, producers sailed through April with a fourth consecutive 2 cent-per-pound increase, according to a number of buyers. As in PE, higher natural gas and oil costs played a role. Strong construction also helped.
``The overall construction market is up right now and it looks like it's staying up,'' a Texas-based PVC buyer said. ``We had a record sales month in April from a price standpoint. Commercial building is stronger than it was last year.''
The construction market accounts for about 60 percent of total U.S./Canadian PVC use, with two-thirds of that amount coming from PVC pipe. Although rising interest rates eventually might cool the new home market, PVC buyers said higher rates are leading to a short-term lift in home construction and sales, as consumers race to get projects financed ahead of future increases.
Buyers also said that a recent move by PVC producers to split a 2 cent May 1 increase into a penny for May 1 and a penny for June 1 could be a sign that pricing momentum is slowing. U.S./Canadian PVC sales were down about 1 percent through February, but producers again chalked that up to a strong first quarter in 2003.
The PP market saw another 2 cents in increases take hold in April, putting prices up a total of 11 cents per pound for the year. Producers have not won the full amounts they have been seeking to offset higher feedstock costs, but have been fairly consistent in lifting prices.
The slow start endured by other commodity resins didn't touch PP in the first two months of the year, with APC reporting PP sales growth of more than 6 percent vs. 2003. Most of that growth came from the export market, where sales through February were up almost 50 percent.
Essentially, U.S./Canadian PP makers exported more than 100 million additional pounds of their product in the first two months of 2004 than they did in the previous year.