Steady pressure on feedstocks has caused prices for polyethylene, polystyrene and nylon to escalate once again.
Average per-pound selling prices for all grades of North American PE are up an average of 5 cents since June 1, according to several buyers contacted recently. Prices for those materials now are up an average of 11 cents per pound since April 1. On blow molding dairy grades of high density PE, that works out to an increase of about 13 percent, according to the Plastics News resin pricing chart.
The PS surge - on all grades of solid and expanded PS - equals 10 cents per pound since Jan. 1, according to industry sources. Average per-pound prices for nylon 6 are up 8 cents per pound since Jan. 1, while nylon 6/6 prices have climbed 12 cents per pound in that period.
Escalation across all three materials is tied in to the onslaught of price increases for crude oil and natural gas feedstocks. Crude oil futures were around $133 per barrel in late trading June 19 - an increase of about 56 percent since late January. Futures for natural gas - used as a feedstock in most North American PE - were near $13 per million British thermal units June 19. That's a jump of more than 60 percent since early February.
The PE move comes a few weeks after major producer Dow Chemical Co. of Midland, Mich., announced that prices for all of its plastic and chemical products would increase as much as 20 percent on June 1. Dow and other PE makers already had 5 cent hikes on the table for that day, and soon after announced additional hikes of 7 cents per pound for July 1.
The PE increases have taken hold in spite of weak regional demand. U.S./Canadian LDPE sales were down 6 percent in the first three months of 2008, according to the American Chemistry Council in Arlington, Va. Three-month sales of LLDPE were off 3 percent, while sales of HDPE slipped 2 percent.
Those totals would be even worse if it weren't for healthy export sales, due in part to a weak U.S. dollar. First-quarter HDPE exports rocketed 32 percent, while LLDPE exports were up 14 percent and LDPE exports were up 3 percent.
``There's no demand pull at all,'' a Chicago-area PE buyer said. ``This is all about feedstocks.''
The buyer added that he's had to become creative in dealing with his resin suppliers amidst the barrage of price increases.
``We're doing some prebuying and trying to negotiate some price delays by offering more business down the road,'' he said. ``Suppliers might change their terms of payment in exchange for a long-term deal. There are ways to make these terms attractive. Almost everything is negotiable.''
The upswing in solid and expanded PS has been bolstered by ongoing lofty prices for benzene, a chemical used to make PS feedstock styrene monomer. Benzene prices were above $4 per gallon in June, although that price actually could be higher based on the material's historical comparison to crude oil, market analyst Greg Smith said.
PS makers ``are just getting back costs'' by raising prices, said Smith, who is with Resin Technology Inc. in Fort Worth, Texas.
U.S./Canadian PS sales were down 5 percent in the first quarter, even with exports up 11 percent, according to ACC. Major PS makers now are seeking increases ranging from 3-5 cents per pound for July 1.
``Polystyrene still is suffering because of the overall market and because of de-selection in favor of other materials,'' Smith said.
In nylon, prices for 6 and 6/6 resin grades each are up with higher feedstock rates and surprising North American demand growth of almost 6 percent in the first quarter. But a closer look reveals that all of that growth occurred because of a surge of almost 35 percent in export sales, again tied to the weak U.S. dollar.
Nylon sales within the region were down almost 2 percent as the domestic automotive market continued to struggle. Auto-related sales accounted for more than 30 percent of first-quarter North American nylon demand, according to the ACC.
Asian demand remains high for nylon in carpets and other fiber uses, RTI's Smith said. Nylon makers also are facing higher production costs and higher costs for such raw materials as cyclohexane, butadiene and acrylonitrile, he added.
Nylon 6/6 market leader DuPont Co. has an increase of 20 cents per pound on the table for July 1. Other producers are considering similar moves.
Moving into the second half of 2008, Smith said that he ``doesn't see fundamentals improving'' for either PS or nylon.
``It's a rough market right now, and it's too early to tell what might happen in 2009,'' he said.