Feedstock pressures edged past soft demand, allowing North American prices to rise for ABS, acrylic, nylon 6 and polycarbonate resins in recent months.
ABS prices edged up an average of 3 cents in June, as higher prices for benzene feedstock affected the market. ABS makers, however, had been seeking an average of 8 cents per pound. And even the slight increase could be challenged, as benzene prices fell in August.
North American ABS demand has been soft again in 2007, after growing less than 3 percent in 2006, according to the American Chemistry Council in Arlington, Va. Buyers attributed slow 2007 sales to weakness in the automotive and construction markets. Combined, those segments accounted for more than 40 percent of sales for ABS and specialty styrenics in 2006.
Annual ABS sales in the region were above 1.5 billion pounds as recently as 1999, but were less than 1.3 billion in 2005 and 2006.
The nylon 6 market also has been hard hit by slowdowns in automotive, but producers still have been able to raise prices an average of 4 cents per pound since May 1. Higher prices for benzene and caprolactam feedstock helped push the nylon 6 increase through, according to several buyers contacted by Plastics News. In some cases, caprolactam was fetching record prices, and supplies of the material were tight.
Automotive-related sales accounted for almost 40 percent of domestic nylon use in 2006. But that market has struggled in the first half of 2007, with North American auto builds down about 10 percent.
Makers of nylon 6/6 - including industry leader DuPont Co. - have been unable to raise prices so far in 2007, but are working on increases of 12 cents per pound. Those increases had Aug. 1 effective dates and now are being negotiated with buyers. Sources said the 6/6 increase attempt could be challenged by lower August prices for benzene, which also should lower prices for adipic acid, a 6/6 feedstock.
Annual North American nylon sales were less than 1.3 billion pounds for the second consecutive year in 2006. That number had been above 1.4 billion as recently as 1999. Operating rates in the region also were under 90 percent in 2005 and 2006.
In polycarbonate, prices have bounced up an average of 6 cents per pound since June 1. Producers - including GE Plastics and Bayer MaterialScience LLC - were seeking increases of 11-15 cents per pound, but were held back by soft regional demand. Regional prices had slipped an average of 10 percent in 2006.
``Polycarbonate is oversupplied on a global basis, but feedstocks like benzene are up quite a bit,'' said Greg Smith, a market analyst with Resin Technology Inc., a resin-buying consultancy based in Fort Worth, Texas.
``From our standpoint, the reasons for the price increase aren't supported,'' a West Coast-based PC buyer said. ``But the producers want to stop the erosion they saw last year. There's still excess supply of about 20 percent in the global [PC] market.''
Market watchers said regional demand for optical media-grade PC - used to make DVDs and CDs - has been hampered in 2007 because of a lack of ``blockbuster'' movies released in multiple-disc DVD packages. The full effect of new DVD formats like HD and Blu-Ray - which could drive sales as fans replace existing DVDs - also might not be felt for another two or three years, sources said.
RTI's Smith added that decreased demand could lead to price erosion in the PC market later this year. North American PC production totaled about 1.7 billion pounds in 2006 and was expected to hit 1.8 billion pounds this year, but sources said such growth now is unlikely.
North American acrylic resin prices are up an average of 5 cents per pound so far this year after being flat for much of 2006, buyers said. Although demand has been soft from the construction market, higher prices for methyl methacrylate feedstock have given resin makers enough leverage to raise prices.
A sizable portion of acrylic resin production is consumed internally by firms like Arkema Inc. and Cyro Industries, which also are large makers of acrylic sheet.