Average North American selling prices for polyethylene resin have tumbled since May 1.
Per-pound prices for high density and linear low density PE each are down an average of 6 cents, while prices for low density PE have slipped an average of 4 cents, according to buyers and market watchers contacted recently by Plastics News.
The drops come after regional prices had climbed an average of 18 cents per pound during the first four months of 2010. That worked out to a hike of 24 percent, based on blow molding grades of high density polyethylene.
Lower prices for ethylene feedstock played a role in the declines, along with lackluster domestic demand and the erosion of export sales from the region.
“The bottom line is that the earlier [PE] increases had occurred because a lack of ethylene had sent [ethylene] prices up,” said Mike Burns, a market analyst with Resin Technologies Inc. in Fort Worth, Texas.
“That was a very visible number, and [ethylene] supplies were tight. Now, more steam crackers are running.”
The LDPE price drop is less than those of HDPE and LLDPE because of tighter supplies of that material. Regional PE supplies also were affected by a decrease in exports during April and May, which caused more material to be available to North American suppliers. Numerous export destinations previously supplied by North America now are buying resin from plants recently started up in the Middle East, sources said.
U.S./Canadian PE sales data for the first quarter of 2010 was positive, benefiting from a comparison to the poor performance of the first quarter of 2009. Regional LLDPE sales zoomed 16 percent for the quarter, with HDPE sales up almost 8 percent and LDPE up almost 7 percent, according to the American Chemistry Council in Arlington, Va.
LLDPE sales, in particular, benefited from first-quarter export growth of more than 40 percent, although those conditions now have dissipated.
Spot market prices for ethylene fell almost 7 percent between April and May, according to data from the PetroChem Wire consulting firm in West Orange, N.J.
The amount of the decreases was hotly contested by PE producers, which tried to limit it to 3-4 cents until the larger totals took hold.
Resin makers “were fighting to hold on to all they could, but once [a decrease] gets out there in the market, it kind of takes on a life of its own,” a Texas-based PE buyer said.
But PE producers had enjoyed a good run earlier in the year, according to Burns at RTI. “They weren't making as much [PE] resin as they could, but they were getting a good price for what they made,” he said.
PE processors, however, may have struggled to pass on previous resin increases before the market started to come back down.
“That last [PE] increase might not have been passed through all the way,” Burns said. “When you're paying $4 a gallon for gas, it's easier to pass on price increases to your customers. But when it's less than that, passing on the increases is more difficult.”
Several market watchers said they wouldn't be surprised to see additional price decreases on PE in June, although perhaps not to the extent of the May drop.
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