Consistency remains a stranger in commodity resins town.
Since Aug. 1, average North American selling prices are up for suspension PVC and down for solid polystyrene and PET bottle resin, while price tabs for polyethylene and polypropylene are standing still.
A 2 cent-per-pound increase took hold in PVC in August, even with the building and construction market in a major slump. Annualized U.S. housing starts for August were down almost 20 percent vs. the same month in 2006, according to the National Association of Home Builders, a Washington-based trade group.
That's not good news for PVC, where construction-related uses made up almost 70 percent of U.S./Canadian domestic sales in the first seven months of the year. Yet higher costs for crude oil and related feedstocks - as well as pricing power consolidated in the hands of the region's five remaining PVC makers - have pushed prices up a net of 8 cents per pound so far in 2007.
Crude oil futures broke through the $80 per-barrel mark in September. At the start of 2007, futures were under $60.
PVC producers are working on a 2 cent increase that was to be effective Oct. 1. Some larger buyers still are negotiating the August move in an attempt to have it lifted or delayed.
``There's no [sales] volume,'' a Midwest-based PVC buyer said. ``This is all about feedstocks. Nobody's building any [PVC] inventory.''
The buyer added that PVC pipe makers will be able to weather the pricing storm as long as they make smart decisions regarding their output.
``You can't out-produce the other guy and still be OK anymore,'' he said.
A Texas-based PVC buyer was a bit less optimistic, and questioned resin makers' decisions to add more than 1 billion pounds of capacity in North America next year.
``Demand [for PVC products] is horrible,'' he said. ``On the West Coast, they're delaying a lot of residential construction. They're not even putting in water pipe in the areas where they'd planned to build houses.
``I don't know where [PVC makers] are going to put the new capacity,'' the buyer added. ``There's a real delicate balance in the U.S. today of customers and who they're buying from.''
PS prices dropped 2 cents in August and another 2 in September. That's not entirely surprising, with domestic demand through July down almost 5 percent and prices for benzene feedstock - a key ingredient in styrene monomer - falling about 9 percent between July and September.
``As benzene receded, it took styrene with it,'' said Greg Smith, a PS market analyst at Resin Technologies Inc. in Fort Worth, Texas. ``But everybody's living with these costs, so it's nothing new.''
PS makers - now reduced to three firms in North America - are aiming to lift prices 3 cents per pound in October. Their chances of doing so improved when the October contract price for benzene closed almost 4 percent higher than the previous month.
In PET, slowing beverage demand knocked 2 cents off average selling prices in September, according to several buyers contacted by Plastics News. The market also is feeling the impact of more than a billion pounds of new capacity introduced by Eastman Chemical Co. and DAK Americas Inc. since late 2006.
Tightness in PET feedstocks - particularly monoethylene glycol - might give producers some leverage in raising prices in October, said some buyers.
The PP market actually went through a 2 up/2 down swing from August to September as the material followed the shifting fortunes of propylene monomer feedstock. The U.S./Canadian PP sector has benefited greatly in 2007 from a massive surge in exports.
Through July, exports from the region were up almost 90 percent vs. 2007, due in part to lower raw material prices and favorable exchange rates with the U.S. dollar. Exports accounted for almost 11 percent of total U.S./Canadian PP sales in that period. PP makers now are working on increases of 3 cents per pound that were to be effective Oct. 1.
The pricing battle in PE has been hard-fought, with buyers fending off price increases in August and September after taking increases averaging 15 cents per pound in the first seven months of the year. Exports again are playing a key role in PE, turning negative domestic sales marks into overall gains in high, low and linear low density PE.
PE makers responded by moving a proposed 4 cent increase to Oct. 1 and placing a 5 cent increase on Nov. 1.
``The increases look like they're in limbo right now, but high oil prices are keeping prices for ethane and ethylene [feedstocks] up,'' said Mike Burns, a PE market analyst with Resin Technologies Inc. ``It's true demand vs. feedstocks.''
One veteran Ohio-based PE buyer said he anticipates tough times for PE makers in 2008.
``Nine months from now, this export demand won't be there,'' he said. ``Mideast capacity that's been delayed will show up and the position of the dollar won't matter. When that happens, the polyethylene companies are going to take a hit in margin.
``They've been bracing for it for some time - and it should have happened this year - but exports gave them a little bit of a cushion.''
Longer-term, the buyer said PE makers will have to deal with the legacy of prices that have been at or near historically high levels since 2004. He pointed out that Procter & Gamble Co. recently began selling laundry detergent in concentrate form, packaged in a smaller bottle that uses 52 percent less PE than a previous version.
``That's demand destruction,'' the buyer said of the packaging switch. ``Some products aren't going to make it and others just won't come to the market.''