Surging feedstock costs have pushed North American prices for polyethylene up since April 1 and have done the same for regional polypropylene prices since March 1.
Average per-pound selling prices for high, low and linear low density PE are up 3 cents per pound since April 1. Producers had been seeking 6 cents, but split the move into 3 cents for April 1 and 3 cents for May 1, market sources said.
Prices for ethylene feedstock have been influenced by crude oil futures prices, which have blown through historic barriers and have flirted with the $120 per-barrel mark. Those prices had been less than $85 in late January. Natural gas, used to make a majority of North American PE, also is experiencing an unseasonal run-up, climbing from $8 per million British thermal units in early February to more than $10 per Btu in the last week.
The PE hike comes even as North American processors are buying flat or less than they were a year ago. One California-based PE buyer said his firm is buying 5 percent less PE than it was at the same point in 2007.
``We're trying to fight [price increases], but the [PE] producers have done what they can to control supply,'' the buyer said. A recent 75-day outage at a Dow Chemical Co. plant in western Canada also limited supply, although the plant now is back in production, sources said.
``There's not a huge amount of buying or restocking right now,'' said Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas. ``People mostly are buying as needed.''
Supplies of HDPE also are said to be tight because of strong export conditions.
According to a market source, exports are up 20 percent so far in 2008, after surging 40 percent in all of 2007. The interest comes from growing foreign markets and is partly a result of the weak U.S. dollar.
Outside Canada and Mexico, China was the top destination for U.S.-made HDPE in 2007, accounting for more than 7 percent of total HDPE trade. HDPE exports from the U.S. and Canada totaled more than 3 billion pounds in 2007, representing almost 17 percent of the region's total output.
PE results were off the charts for Nova Chemicals Corp. in the first quarter of 2008.
The Pittsburgh-based firm set a quarterly record with sales of 916 million pounds of PE - a jump of 14 percent from the first quarter of 2007. The company's pretax profit also doubled in the same comparison, going from $22 million to $44 million.
Nova's ``Alberta Advantage'' - the cost benefit it receives by sourcing natural gas from western Canada instead of the U.S. Gulf Coast - reached 21 cents per pound during the quarter.
In PP, prices climbed an average of 2 cents per pound in March and another 4 cents in April, according to several sources. Soaring costs of propylene monomer were cited as reasons, as high gasoline demand and prices pushed monomer into that market rather than into resin production.
Buyers also reported a slow sales market for PP, after domestic sales were up only 2 percent in 2007, according to the American Chemistry Council in Arlington, Va. As with HDPE, robust exports lifted the market to an overall U.S./Canadian PP growth rate of 5.2 percent. Outside of Canada and Mexico, China again was the top destination for U.S. PP in 2007, accounting for about 11 percent of the total.
Domestically, the leading PP growth market for 2007 was injection molded consumer products. Sales into that segment were up about 11 percent to just over 2.7 billion pounds.
PP makers now are seeking increases of 5 cents per pound set to take effect May 1.