Average per-pound selling prices for North American polyethylene, polypropylene, suspension PVC and PET bottle resin continued to swoon in December but market watchers said those markets could be stabilizing in early 2009.
The slump has been caused by worsening demand in a wide variety of markets, as a worldwide recession leads global consumers to keep their wallets shut. Oil and gas feedstock prices also have enabled the slide. Crude oil peaked at $147 per barrel in July but was at $41 in early trading Jan. 8 a drop of 72 percent. Natural gas prices were at $13 per million cubic feet in July, but stood at $5.90 in early trading Jan. 8 a drop of 55 percent.
PE prices fell another 10 cents per pound in December, only half of the 20 cent plummet they took the month before. This week's Plastics News resin pricing chart reflects the 10 cent December move plus an additional 5 cents for November, when buyers originally expected a decrease of only 15 cents.
PP prices slipped another 10 cents per pound in December, after taking an epic 30 cent dive in November. Suspension PVC stung by the virtual disappearance of the construction market saw per-pound prices move down 7 cents in both November and December, for a total of 14 cents. Both moves are shown on this week's PN pricing chart.
In PET, prices took a 6 cent dip in December half of what the market experienced in November. Seasonally slow beverage market sales and reduced use of PET via thin-walling of bottles has impacted the PET market.
PE and PP sales have been buffeted by reduced demand in a variety of industrial and consumer applications, particularly housewares, appliances and automotive.
``Demand is weak,'' an Illinois-based PE and PP buyer said. ``Right now, resin companies are fighting just to hold [market] share.''
``There's no demand,'' a Midwest-based PVC buyer added. ``Everybody's running at low rates. It seems like demand has only gotten worse with every day that goes by.''
Prices for PE now have fallen 45 percent or 49 cents per pound since Sept. 1, according to the PN chart. PP prices are down 54 percent, or 65 cents, since then. PET bottle resin prices are down 36 percent (35 cents) and suspension PVC prices are down 23 percent (19 cents) in the same comparison.
PE makers have now released increase requests of 7 cents per pound for Jan. 1 and 5 cents for Feb. 1. Several PVC makers are trying to lift prices 5 or 7 cents per pound on Feb. 1. Buyers of both materials were skeptical of the increase requests, but PVC market analyst Steve Brien said that seasonal PVC production actually may increase in February, March and April.
``The market may have overreacted in November and December, both on the buying side and the production side,'' said Brien, who is with Chemical Market Associates Inc. in Houston. ``If inventories are severely depleted, production will have to be higher.''
In a Dec. 31 news release, officials with PetroChem Wire LLC a materials market publication based in West Orange, N.J. said that by September, the U.S. market ``was drowning in resin.''
``Two hurricanes hit Louisiana and Texas and closed most of the olefins and polyolefins production in the region for close to a month and still, the market was long,'' PCW executive editor Kathy Hall said.
Resin makers have taken major moves to curtail production, in an attempt to align supply with demand. Market watchers estimate that 20-30 percent of North American PE and ethylene feedstock currently are off-line, either for maintenance turnarounds or because of simple lack of demand.
Other recent closings have been of a permanent nature. These moves include:
* Flint Hills Resources LLC closing almost 800 million pounds of PE capacity and more than 100 million pounds of PP capacity at a plant in Odessa, Texas.
* Ineos Group removing more than 500 million pounds of PP production from La Porte, Texas.
* Invista closing about 300 million pounds of PET capacity in Greer, S.C.
* Georgia Gulf Corp. removing 450 million pounds of PVC capacity from Sarnia, Ontario.