Average North American selling prices for several commodity plastics continued to fall in December, but resin makers are hoping they can stem the tide in early 2007.
Prices for all grades of polyethylene fell an average of 3 cents per pound in December, according to several buyers contacted recently, while prices for PVC and PET each dipped 2 cents per pound and polypropylene prices slipped an average of 1 cent.
The PE price plunge leaves prices down a total of 18 cents per pound since Sept. 1. On homopolymer/dairy grades of high density PE, that works out to a price reduction of about 22 percent.
``Demand was soft in December and it's still pretty soft right now,'' a Texas-based HDPE buyer said. ``[PE] producers have tried to raise prices through [resin] brokers, but [brokers] didn't take it.''
Cash prices for natural gas - used as a feedstock in more than 60 percent of North American PE - have been below $7 per million Btu since mid-December as a result of warmer-than-expected winter weather in the Northeast and Midwest. Those prices had bounced between $7 and $8.50 per unit from mid-November to mid-December.
PE makers now are working on a total of 13 cents per pound in price increases, including 6 cents originally set for mid-December and another 7 cents originally set for mid-January. Buyers said they now believe PE makers will opt for a 3 cent move in February.
PVC prices fell 2 cents for the third consecutive month. The 6 cent dip has taken about 9 percent off of prices for pipe-grade suspension PVC. Pipe makers - who contribute about 40 percent of North American PVC demand - appear to be playing a waiting game and not adding as much inventory as they would in light of the approaching construction season. Market watchers think construction may be lighter than in recent years as the North American housing market slows.
``Standard construction might be off a bit, but we're hoping for activity in strip malls and industrial parks,'' a Texas-based PVC buyer said.
PET bottle resin fell once again as seasonal softness magnified buyers' concerns about the effect that recent resin capacity additions will have on the market. In addition to the 2 cent December move, Plastics News this week is reporting another 2 cents that came out of the market in October and November. The result is a total drop of 4 cents on this week's pricing chart.
Prices for PET now are down 12 cents, a plunge of about 17 percent on bottle resin, according to the PN resin pricing chart.
``There were a lot of spot deals and year-end sales that helped bring prices down [in December],'' a Chicago-based PET buyer said. ``But there still should be volume growth in the business.''
Escalating feedstock costs for PET feedstocks paraxylene, purified terephthalic acid and ethylene glycol have prompted producers Eastman Chemical Co. and DAK Americas Inc. each to announce 5 cent-per-pound price increases. Those increases are set to take effect Feb. 15.
In PP, prices ticked down another penny, bringing the market's four-month price drop to a total of 12 cents - or a drop of about 14 percent on general-purpose homopolymer PP.
A temporary outage of propylene monomer at Total Petrochemicals' complex in La Porte, Texas, might provide PP makers with justification for trying to raise prices in early 2007, market watchers said.