With leaves starting to fall, prices for polyethylene, polypropylene and PET bottle resin have done the same in recent weeks — but at a rate closer to a bowling ball in a laundry chute.
Prices for all grades of PE are down an average of 7 cents per pound since Sept. 1, according to buyers contacted recently by Plastics News. Average per-pound prices for PP have taken an even bigger drop, slipping 14 cents per pound since Sept. 1. PET bottle-resin prices are down a total of 10 cents per pound since Aug. 1, falling roughly 5 cents each in August and September, buyers reported.
Buyers cited slumping demand and falling raw material prices as major reasons for the slides. These sizable drops come after prices for each material had shot up dramatically in the first part of the year, driven by crude oil prices that peaked at $147 per barrel in mid-July, but since have declined to $94.50 in late trading Oct. 2.
On blow molding dairy grades of high density PE, prices climbed 20 percent — or 17 cents — in 2008 before falling 7 percent in September. For injection molding grades of homopolymer PP, prices surged 30 percent (28 cents) before the 12 percent September drop. PET bottle resin was up 19 percent (15 cents) before falling 10 percent in the August-September decline.
``Oil is down and [natural] gas is down, so the energy push that [resin makers] had to justify the increases is gone,'' a Chicago-based buyer of PE and PP said. ``There's plenty of inventory and demand is extremely soft.''
Weak demand has blunted the impact of Hurricanes Gustav and Ike, which hit the Gulf Coast during September. Resin plants throughout the region were down as a result of the storms, but most have restarted. Several resin makers are working through force majeure or product allocation terms with their customers, but with demand off this year, the storms have had nowhere near the impact that Hurricanes Katrina and Rita did in 2005.
PE plants still experiencing production problems include ExxonMobil Chemical Co.'s plants in Beaumont, Texas, and a Chevron Phillips Chemical Co. LLC site in Orange, Texas. LyondellBasell Industries AF SCA also is dealing with production challenges at PP plants in Bayport, Texas, and Lake Charles, La.
A California-based PP buyer reported some delay in receiving material, but the buyer said those delays likely were the result of rail backups rather than production problems at his PP suppliers.
Nova Chemicals Corp., based in Pittsburgh and other PE makers have announced 7 cent increases for Oct. 1. But buyers said they were skeptical of those moves, given lackluster demand and raw material prices that are not expected to rise much in the near term.
The demand drop for low density PE has equaled 4 percent through July, while PP demand has slipped 8 percent, according to the American Chemistry Council in Arlington, Va. HDPE demand has been flat, with LLDPE demand up only 1 percent. PET bottle resin is 2 percent ahead of last year's pace, according to industry contacts.
PP also has been impacted by growing supplies of propylene monomer feedstock, resulting from the end-of-the summer driving season and falling gasoline prices, sources said. When gas prices were high, propylene was diverted to that market for use as a fuel additive.
PET prices further were affected by weak global demand for paraxylene and ethylene glycol feedstocks, industry contacts said.
Taking improved export sales out of the seven-month PE sales worsens the demand drop, leaving domestic HDPE and LDPE markets each down 6 percent and LLDPE down 2 percent, according to ACC.
Conversely, U.S./Canadian PP exports are down substantially after reaching record levels in 2007. As a result, the domestic PP market, with only a 5 percent loss, has fared better.