North American selling prices for polyethylene and polypropylene resin continued their relentless push ahead in March.
Average per-pound selling prices for all grades of PE are up 6 cents per pound since March 1, with PP prices up an average of 5 cents per pound in that same period. Regional PE prices now are up 18 cents per pound since Jan. 1, with PP prices escalating 15 cents since then.
On dairy blow molding grades of high density PE, that works out to a three-month price increase of about 24 percent, according to the Plastics News resin pricing chart. On general-purpose injection molding grades of homopolymer PP, it's been a climb of about 16 percent.
The PE increases have been caused by an unexpected combination of factors, including low inventories and outages of ethylene feedstock, according to Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas.
2009 was a huge [PE] export year and December was one of the strongest [export] months ever, Burns said. Then domestic [PE] processors wanted to re-stock in December, but producers' inventories were as low as they'd been in a while.
So when there were production issues because of ethylene outages, that led to high costs for ethylene which have been passed down to polyethylene.
Production issues have affected Chevron Phillips Chemical Co. LLC, which earlier this month declared force majeure on all of its PE grades. Dow Chemical Co. also is using demand management on some of its HDPE grades, while Eastman Chemical Co.'s ethylene output has been limited as well.
In a recent e-mail, Dow's Glenn Wright commercial vice president of North America Basic Plastics for the Midland. Mich.-based firm said that restricted ethylene availability in North America isn't expected to improve for at least 90 days.
There have been planned and unplanned [ethylene] outages, and some of the planned turnarounds they started in December have taken longer than expected, RTI's Burns added. But ethylene might start to be more available next month. Spot [ethylene] prices already are trending down from 70 [cents per pound] to 60.
Export demand also is down because higher [North American] PE prices now mean material from outside [North America] is priced lower than our own material.
In PP, resin production and pricing remains captive to the whims of propylene monomer feedstock. Use of lower-priced ethane feedstock derived from natural gas has saved PP makers some money, but that process also creates less propylene than crude oil-based naphtha feedstocks.
As a result, there's less propylene monomer available to make resin than the market has seen in recent years. The North American PP market further has been tightened by production problems experienced by market leader LyondellBasell Industries AF SCA at its plant in Lake Charles, La., and by Ineos Group at an undisclosed location.
2009 was a rough year for North American PP demand, which fell 8 percent, even as exports from the region soared 54 percent, according to the American Chemistry Council in Arlington, Va.
The only major domestic PP end markets where demand grew during 2009 were sheet (up 21 percent), injection molded housewares (up 3 percent) and injection molded cups and containers (up 3 percent). Many other big end markets for PP including injection molded caps and closures (down 11 percent) and film (down 6 percent) didn't fare as well.
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