A recent surge in crude oil prices has helped North American resin makers increase per-pound selling prices for polyethylene, polypropylene and PET bottle resin.
Crude oil futures hit an all-time high of more than $89 per barrel on Oct. 18.
PE increases that had stalled in August and September took hold as a result, since ethane feedstock prices have been tracking crude oil prices for more than a year - even though ethane is produced from less-expensive natural gas. Prices for all grades of high, low and linear low density PE now have climbed an average of 4 cents per pound since Oct. 1, according to buyers contacted recently.
At least two PE makers were trying to raise prices for brokers and resellers an additional 5 cents per pound as of Oct. 15. The 5 cent move originally had been slated for Nov. 1, with an additional 6 cents nominated by some producers for Nov. 15.
``The [PE] producers who aren't fully integrated are absolutely desperate to get these increases,'' one Midwest-based PE buyer said. ``It's not based on demand at all, but with ethane [prices] going above a dollar, [producers] are faced with producing at cash cost levels.''
Mike Burns, a market analyst with Resin Technologies Inc. in Fort Worth, Texas, said the oil jump played a major role in the increase.
``A lot of people were still negotiating, but when the price of crude did what it did, things turned around pretty quickly,'' he said, adding strong exports of PE from North America continue to compensate for low domestic demand.
Average selling prices for all grades of PE now are up 18 cents per pound so far in 2007. On blow molding grades of HDPE for dairy products, that works out to an increase of 28 percent.
In PP, oil prices and tightness in propylene monomer supplies have pushed prices up an additional 3 cents per pound since Oct. 1. For the year, PP prices now have soared an average of 17 cents per pound. On injection molding grades of homopolymer PP, that's meant a surge of 24 percent.
The PP market has seen the most benefit from strong exports, with volumes in pounds up almost 90 percent through July. The export market has been helped by a weak U.S. dollar. On Oct. 18, the dollar hit an all-time low of $1.43 vs. the euro.
For PET, prices are up an average of 3 cents per pound since Oct. 1, with extreme tightness in supplies of ethylene glycol playing a major role. Prices for the material have bounced around during 2007 and now are up a net of 6 cents per pound since Jan. 1, for an average increase of 9 percent.
Market watchers said the ethylene glycol situation could keep PET prices high late into 2007, at a time when prices tend to soften.