Pressure from feedstocks and supply tightness caused by strong export markets have sent prices for polyethylene and polypropylene each up an average of 4 cents per pound since May 1.
Prices for solid polystyrene also have moved up an average of 5 cents per pound, as a result of surging prices for benzene feedstock. Prices on hexene-based grades of linear low density PE are up 7 cents per pound, buyers said.
``Both [PE and PP] increases have stuck because [resin makers] are selling so much offshore,'' a Georgia-based buyer of PE and PP said. ``They've got advantaged prices vs. some European and Asian producers, and they've been pretty brutal in pushing the increases through.''
The PE hike brings the total increase, to date, in 2007 up to 10 cents. PE makers now are seeking increases of 5 cents per pound set to take effect June 1.
The increases have come even as domestic PE demand has been less than robust. Total North American PE demand was up about 6 percent through April, according to an industry source, but demand in the domestic market had increased only about 2 percent.
North American PE makers ``have been exporting the heck out of the market,'' according to Mike Burns, a market analyst with Resin Technology Inc. in Fort Worth, Texas.
``European exports have continued when the Asian doors closed,'' Burns said. ``And that's kind of surprising to some people in the market, since that's rarely been the case in the last 20 years. But producers with channels to move material have made a lot of money.''
North American PE makers also are benefiting from favorable exchange rates. One euro was worth about $1.35 as of May 17.
``The U.S. polyethylene pellet has been the cheapest in the world for the last six months,'' an executive at a PE resin firm said. ``Export continues to be a viable market for incremental capacity.''
Burns added that domestic PE demand may be even weaker than it seems, since sales in the first quarter of 2006 were extremely low. That was because prices fell after major hurricane-related run-ups in late 2005.
Moving ahead, he said that the ``wild cards'' for North American PE are possible inventory restocking among North American processors and the potential return of Asian export opportunities.
In PP, the price jump comes on the heels of a similar increase in April. PP buyers contacted by Plastics News indicated that the moves are tied to propylene monomer feedstock and aren't the result of strong demand.
Prices for propylene feedstock are up as a result of more material being diverted to the gasoline market, where it is used as an additive. Gas demand has risen recently with warming temperatures in much of the U.S.
North American PP operating rates peaked at more than 90 percent in the first quarter of 2007, but are expected to decline for the remainder of the year.
The PS market continues to be hammered by high benzene prices, which hit a record contract high of $4.20 per gallon in May - an increase of 15 percent vs. April. As a result, PS profit margins continue to shrink even as prices climb.
North American PS operating rates are expected to approach 90 percent in the second quarter, but market analyst Kevin McCarthy said in a recent note to investors that ``it's not clear at this point whether the strength in production is the result of true underlying demand or the result of pre-buying in anticipation of several price increase announcements.''
McCarthy, who's with Banc of America Securities in New York, added that PS margins are expected to improve in the second half of 2007 and on into 2008.
Based on the Plastics News resin pricing chart, average prices for blow molding dairy grades of high density PE now are up about 16 percent in 2007, while prices for injection molding grades of homopolymer PP have climbed about 18 percent. Prices for injection molding grades of high-impact PS are up about 12 percent since April 1.