High-flying demand has lifted prices for polypropylene and PET bottle resin in recent weeks.
Average North American selling prices for PP have gone up another 2 cents per pound since Aug. 1, while makers of PET have fully implemented their 2 cent June increase to most buyers, according to a number of PET buyers contacted recently.
With crude oil hitting record highs, the entire feedstock chain for both products has been affected. U.S. crude surpassed the $47 per-barrel level on Aug. 18, an all-time high that represents an increase of more than 50 percent from a year ago.
An Ohio-based PP buyer said he thought suppliers were ``trying to make up for lost time,'' after seeking relatively small increases earlier in the year. The 2 cent-per-pound increase for August leaves prices up an average of 13 cents so far in 2004. That's an increase of about 28 percent on injection molding grades of homopolymer PP, according to the Plastics News resin pricing chart.
Fueled by an increase of almost 30 percent in export sales, U.S/Canadian PP sales were up almost 9 percent in the first half of 2004, according to the American Plastics Council in Arlington, Va. Higher resin prices in Asia have opened up that market to North American imports, sources said.
Even without export growth, domestic demand is up almost 8 percent. Domestic growth has been led by gains of 20 percent in sales for injection molded cups and containers, 13 percent for sheet, 31 percent for resellers and 13 percent for compounders.
``Exports and injection molding are both strong,'' said Bob Dennett, a PP industry analyst with consulting group Chemical Market Associates Inc. in Houston. ``Early on, PP makers didn't think processors could absorb large price increases, They also expected propylene [monomer] prices to drop, but they never did. Now [PP makers] will probably try to get more [price increases] by the end of the year.''
Another industry source said a number of consumer products that first may have been made of polystyrene or high density polyethylene now are going directly into PP because of the material's improved performance and relatively lower price.
With operating rates at or above 90 percent, industry watchers said PP supply could be an issue if demand growth continues.
Several sources said that PP manufacturers Atofina Petrochemicals Inc. of Houston and Formosa Plastics Corp. USA of Livingston, N.J., planned incremental capacity increases of as much as 650 million pounds, total, via debottlenecks by the end of the year. Officials at Atofina and Formosa declined to comment.
Outside of those possible moves, the next North American PP capacity gain might not happen until late 2005, when Basell Polyolefins could restart 800 million pounds of idled capacity in Bayport, Texas.
Meanwhile, PET makers have taken advantage of first-half demand growth of 8-9 percent to put another 2 cents in place, elevating their total 2004 price gain to 14 cents per pound - a jump of about 22 percent on bottle resin prices, according to the Plastics News pricing chart.
Industry officials recently have cited strong sales into markets for bottled water, juices and new, low-carbohydrate soft drinks. PET makers now are working on completing a 2 cent-per-pound move implemented July 1.
They also blamed higher prices for feedstocks paraxylene and purified terephthalic acid.
On the capacity front, Wellman Inc. of Shrewsbury, N.J., recently announced plans to add 600 million pounds of resin via a fiber conversion in Bienville, Miss., in early 2006. Market leader Voridian of Kingsport, Tenn., also has said it will meet market demand via debottlenecks, but declined to offer details.