Recent North American polypropylene demand hasn't been that great. On the other hand, regional PET demand is looking pretty good. In spite of this difference, prices for both materials have gone up in recent weeks.
Per-pound selling prices for PP have jumped an average of 4 cents since April 1, according to buyers contacted recently. Prices for propylene feedstock were up as a result of more material being diverted to the gasoline market, where it is used as an additive. Gas demand recently rose with warming temperatures in much of the U.S.
PP producers now are seeking increases from 5-9 cents per pound for May 1. Most buyers said they expect that increase attempt to settle at 5 cents.
``It's like the polypropylene guys are on a fishing trip,'' a Chicago-area buyer said of the increase announcements. ``They keep putting out these hooks and hoping one catches a fish.''
North American PP supply will tighten later this year or in early 2008 when Ineos Olefins & Polymers USA closes its oldest PP unit at its Chocolate Bayou complex in Alvin, Texas. That unit has annual capacity of about 450 million pounds. At the same time, officials with Houston-based Ineos said the firm is considering adding 200 million pounds of capacity on newer PP units.
``Our aim is to greatly strengthen our portfolio of products where we have a competitive advantage and exit disadvantaged markets,'' Ineos O&P Chief Executive Officer Dennis Seith said in a news release. ``The changes we are making will deliver a robust polypropylene business that continues to meet the ongoing needs of our customers.''
Market leader Basell Polyolefins also recently announced plans to restart an idled 485 million-pound capacity PP unit in Bayport, Texas. That line is expected to come back in mid-2008.
Recent North American PP demand ``hasn't been great, but it's steady,'' according to Jerry Fordyce, a market analyst with Townsend Polymer Service & Information in Houston.
``The key was that propylene monomer went up 4 cents in April and is expected to go up again in May,'' he said. ``The increases in resin have come through these increases [for monomer]. Margins are still tight for [PP] suppliers.''
In PET, bottle resin prices have climbed an average of 5 cents per pound since March 1. Demand has ticked up somewhat in advance of summer months when more beverages are sold, and PET makers now are working on increases of 3 cents per pound for May 1. Market leader Eastman Chemical Co. also has announced a 4-cent increase for June 1, sources said.
Kingsport, Tenn.-based Eastman saw sales of PET increase 9 percent in the first quarter, even as the business posted a loss of $23 million. It lost $6 million in the same period last year. In a news release, Eastman officials cited lower selling prices and continued higher prices for raw materials and energy as reasons for the decline.
Eastman recently opened a major new PET plant with annual capacity of almost 800 million pounds in Columbia, S.C. The plant uses Eastman's Integrex technology, which has been touted as a more efficient, more profitable way of making PET.
DAK Americas LLC of Charlotte, N.C., also added capacity in late 2006. Overall North American PET capacity is expected to increase about 20 percent between mid-2006 and mid-2007. Market analysts also expect PET demand in the region to increase 6-8 percent this year.