North American prices for high density polyethylene and polypropylene continued to climb in June, as processors worked off inventories and began to buy material once again.
Average per-pound prices for HDPE are up 3 cents since June 1, as HDPE makers pushed through the second half of what originally had been announced as a 6 cent move for May 1. Most makers of low density and linear low density PE got the full 6 cents back in May, although some split the increase out in the same manner as HDPE.
The net effect is that prices for all three PE grades are up an average of 6 cents since May 1. PE makers now are trying to maintain upward pricing momentum with an increase of 7 cents per pound for July 1. That attempt is the postponed culmination of a number of additional June increase attempts.
A major PE buyer in the Chicago area said that pricing leverage enjoyed by PE makers in May seemed to dissipate a bit it June, as demand for PE products - not very strong to begin with in 2006 - entered into a summer slowdown phase.
Through April, U.S./Canadian sales of HDPE were up almost 4 percent vs. the same period in 2005, according to the American Plastics Council in Arlington, Va. Sales of HDPE into the pipe and conduit market surged 26 percent during the period.
In PP, prices have climbed 4 cents since June 1, mainly as a result of tightness in markets for propylene monomer and a slight uptick in end-use demand, sources said. Producers had been seeking a 6 cent jump in June, after getting 3 cents out of a 4 cent attempt in May.
``Our own polypropylene use is basically flat [with last year],'' a Midwestern PP buyer said. ``But [propylene] monomer is causing the [resin] price to move.''
``[PP] suppliers are on a real cost push right now,'' added Lowell Huovinen, a market analyst with Resin Technology Inc. in Fort Worth, Texas. ``I don't think demand is that strong on the customer side, but some segments are fairly busy.
``It's getting to the point where [PP] prices are costing processors business with their end customers. Prices are so high that end customers are only buying what they need, and most North American processors already are running as lean as they can.''
Market watchers added that propylene monomer supplies are being affected by outages at plants run by Huntsman Corp. and Nova Chemicals Corp. PP inventories on the producer side also are several days below the 40-day level that many producers like to maintain.
According to APC, U.S./Canadian PP sales were up 1.5 percent in the first four months of 2006. Sales for domestic use actually were up more than 2 percent, but the overall number was brought down by a drop of more than 4 percent in exports.
Among major PP end uses, rigid packaging led the way with a four-month sales gain of 5.5 percent. Major PP makers now are seeking increases of 5 cents per pound on July 1.
Compared with late June 2005 - and factoring in post-hurricane price run-ups and early-2006 price erosion - prices for dairy blow molding grades of HDPE now are up 22 percent. In the same comparison, prices for homopolymer injection grades of PP are up 25 percent.