Commodity resin prices are off to a tumultuous start in 2008, with prices for polyethylene, polypropylene and PET seeing recent drops and PVC stubbornly holding on to gains.
PE prices fell an average of 3 cents per pound in February after rising by that same amount in January. Soft domestic demand and declining export business played a role in the slide, market contacts said. A lack of available shipping containers in Houston and elsewhere slowed exports.
Lower prices for ethylene feedstock - particularly in the spot market, where prices fell by 10 cents or more - led PE buyers to seek lower prices from suppliers.
``We asked for a decrease when we saw the big margin on ethylene,'' a major PE buyer based in the Midwest said. ``Our business is flat, so we don't need a lot of additional material. But the opportunity [for PE makers] to export is still there because of the weak dollar.''
``It was hard to watch ethylene drop and expect buyers not to try to get some of that [pricing] back,'' said Jerry Fordyce, a market analyst with Townsend Polymer Service & Information in Houston. ``But North American prices are still attractive on the global market.''
Fordyce added that some North American PE makers ``are pleasantly surprised'' by how much domestic demand has held up in early 2008.
An additional 2 cent PE price drop reported by some pricing indexes was not confirmed by a majority of buyers contacted by Plastics News and is not reflected on this week's pricing chart. PE makers now are seeking hikes of 5 cents per pound for March 1.
In PP, a 1 cent upward move in January was countered by a 2 cent drop in February, leaving prices down an average of a penny since Jan. 1, sources said. PP makers were buffeted by gyrations in price for propylene feedstock and also have seen the export market slow. Domestic de- mand, however, was stronger than expected in early 2008, according to one industry executive.
Throughout 2007, PP and PE - especially HDPE - were able to benefit from the soft value of the U.S. dollar, which effectively has made the U.S. a low-cost supplier of those resins. One euro was worth $1.53 on March 6. It had been worth $1.31 on that same date in 2007 and $1.20 in 2006.
PET prices, affected by slowing demand and improvements in supplies of monoethylene glycol feedstock, have fallen an average of 3 cents per pound since Jan. 1.
Demand traditionally is slower in the winter months for PET, which is heavily weighted toward the carbonated soft drink and bottled water markets.
Several PET makers, including DAK Americas LLC of Charlotte, N.C., and M&G Group of Houston, now are seeking increases of 5 cents per pound effective April 1.
The battle royal in PVC prices surged over from late 2007 into early 2008. A hard-fought 4 cent increase announced for Nov. 1 eventually took hold, but some buyers did not actually see it appear until Jan. 1, so new contract terms could be matched for 2008.
PVC makers then were able to keep prices steady in January and February, due in part to an extremely strong export month in January, when sources said almost 200 million pounds of North American PVC set sail for foreign ports. PVC producers now are working on increases of 2 cents per pound for March 1.
In North America, PVC makers ``can export the heck out of the market,'' a Texas-based PVC buyer said. ``Domestic buyers are paying less than the export price, but [our company] is only buying a little bit more than we were a year ago.''