Lower year-end demand has allowed average North American selling prices for polypropylene to drop since Dec. 1, and is pushing polyethylene prices in the same direction.
PP prices dropped an average of 4 cents per pound as demand dropped and production resumed in the Gulf Coast. North American PP makers had won 19 cents in increases since Aug. 1, but material was already piling up by late November.
``I'm getting a lot of offers [from PP makers] but I'm done buying until next year,'' an Ohio-based PP buyer said. ``I don't want to have a lot of higher-priced resin in my inventory.''
A Pennsylvania-based PP buyer added that he was reducing his purchase levels at the end of the year, and that lower prices for propylene feedstock also were sending resin prices downward.
Through September, U.S./Canadian PP sales roughly were flat vs. the same period a year ago, according to the American Plastics Council. Sales had been up slightly before the region saw a hurricane-related sales drop of almost 7 percent during September.
The PE market is softening, with buyers expecting prices to shed 3-5 cents per pound by the end of December. But that scenario has not yet been realized and remains in a bit of turmoil. There's a good deal of PE available, but natural gas feedstock prices are up and resin makers are fighting to hold on to 32 cents in price increases they had won since Aug. 1. Those increases largely resulted from higher raw material costs and production problems caused by Hurricanes Katrina and Rita.
Many North American PE processors were placed on allocation by their suppliers after the storms, and did not receive all of their contracted shipments. This situation led many processors to source from Asia and the Middle East to protect their own production schedules.
Now, there's Asian resin available as North American producers are returning close to normal production of their own. Combine that with typical year-end slowdowns in injection molding and other markets, and things have loosened a bit, with many buyers expecting to see a dip in price by Jan. 1.
``I haven't increased my buying, and there are several sources of resin available right now,'' a California-based PE buyer said.
Increased levels of imported resin ``are the lasting legacy of the hurricanes,'' said market analyst Nick Vafiadis with Chemical Market Associates Inc. in Houston.
``What the hurricanes did was open up channels for North American buyers to suppliers in Asia and the Middle East, even before those suppliers were ready to sell into this region,'' Vafiadis said. ``It made them accelerate their plans.''
The hurricane market put a crimp on U.S./Canadian PE sales totals for the first nine months of 2005. Regional sales of low density PE were down almost 3 percent, while high density PE sales slipped more than 2 percent, according to APC, based in Arlington, Va. Sales of linear LDPE defied the trend and were up almost 4 percent.