The sky seems to be the limit for polypropylene and PET bottle resin, with prices for both materials climbing again recently.
In both cases, suppliers and buyers pinned the upticks on higher prices for feedstocks throughout the petrochemical chain, starting with crude oil or natural gas.
Average per-pound selling prices for PP rose another 2 cents per pounds in July, bringing the total price increase amount for 2004 to 13 cents per pound. Some buyers reported seeing 3 cents in increases in July, putting their year-to-date number at 14 cents.
Most PP makers were seeking 3 cents in July, but lower prices for feedstock propylene monomer prevented the full increase from taking hold in some cases, according to a number of buyers contacted by Plastics News.
``The problem is that oil is at $41 [per barrel] and natural gas is up,'' a Midwestern PP buyer said. ``As long as those numbers are up, traditional [year-end] price cuts will be long gone.''
Through May, U.S./Canadian PP sales were up almost 9 percent vs. the year-ago period, according to the American Plastics Council in Arlington, Va.
Most of that growth came from a jump of almost 50 percent in export sales. Domestic market growth checked in at 5.4 percent, led by gains of more than 17 percent in cups and containers and 40 percent in sales to resellers.
``Supply and demand are finally kicking into gear,'' said Craig Blizzard, North American marketing manager for market leader Basell Polyolefins of Elkton, Md. ``Every time you go to the grocery store, you see consumers buying everything from candy to potato chips in cups made of polypropylene.''
PP makers have followed up with a new round of increases of 2-3 cents set for Aug. 1.
In PET bottle resin, producers hammered through increases of 6 cents per pound in April and 3 cents per pound in May, bringing the total 2004 increase to an average of 12 cents. Increases of 2 cents each for June and July remain on the table, but haven't gone through to a majority of buyers, sources said.
``Our demand has been consistent, but not enough to keep up with these increases,'' said a PET buyer in the U.S. Southeast.
Industry sources pegged North American PET growth at about 4 percent in the first half of the year. Edgar Acosta, an industry analyst with the DeWitt & Co. consulting firm in Houston, said the bottled-water market has remained strong, while the carbonated soft drink sector has been ``a little better than usual'' because of sales of low-carbohydrate soft drinks such as Coca-Cola Co.'s C2.
A potential shortage of PET feedstock paraxylene in the Asian market could keep global PET markets tight in the short-term, Acosta added.