North American selling prices for polyethylene and suspension PVC have continued their summer slides.
Since June 1, regional prices for high and linear low density PE are down an average of 8 cents per pound, according to buyers contacted recently by Plastics News, while prices for LDPE are down an average of 4 cents.
The HDPE and LLDPE slides were split between a drop of 6 cents in June and a 2-cent drop in July. LDPE prices fell an average of 4 cents per pound in June and were flat in July, buyers said.
HDPE and LLDPE prices now are down 14 cents per pound (15 percent) since May 1, after jumping 18 cents (24 percent) in the first three months of the year, according to the Plastics News resin pricing chart.
In PVC, regional suspension PVC prices slipped an average of 3 cents per pound in June. That makes a total drop of 7 cents (8 percent) since May 1, after prices had surged an average of 10 cents (13 percent) in the first quarter.
Overly aggressive PE pricing earlier in the year some of which was tied in to outages of ethylene feedstock may have played a role in recent price declines, according to Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas.
There was an artificial [pricing] run-up in the first half of the year, Burns said in a recent phone interview. Exports are down, and [processors] haven't been buying because they're trying to get rid of high-priced pellets.
Through April, U.S./Canadian HDPE sales showed a modest gain of about 3 percent, as a 7 percent gain in domestic sales was tempered by a drop of almost 14 percent in exports, according to the American Chemistry Council in Arlington, Va. Regional sales of LDPE fared better with 6 percent growth. Sales of LLDPE led the way with total sales growth of almost 12 percent.
But each of those numbers appear to have declined in the summer months, with processors working off inventories and export sales on the decline.
Even with a three-month drop of 14 cents in HDPE/LLDPE pricing, Burns said the market is still a little overpriced because of the big pricing gains posted in the first quarter.
Pricing was way down in the first part of '09, but now it's gone in the other direction, he said.
For PE maker Nova Chemicals Corp. of Pittsburgh, first-quarter PE sales volume in pounds moved up 2 percent to 784 million. More impressively, Nova's PE business had a first-quarter operating profit of $80 million after losing $7 million in the year-ago quarter.
Continued weakness in the housing market has prompted PVC prices to continue their downward drift. Buyers that may have stocked up early for the summer construction season now find themselves with more material than they need, sources said. That may continue as homebuilders haven't seen the rebound they had hoped for in new construction.
Although U.S./Canadian PVC sales were up almost 13 percent in the first four months of 2010, according to ACC, almost all of that growth can be credited to export sales, which were up more than 50 percent. Domestic sales, by comparison, were up less than 2 percent.
PVC's flagship rigid pipe and tubing segment accounting for almost 45 percent of four-month sales was down almost 5 percent. The only construction-related PVC segment to show early-year growth was fencing and decking, where sales grew about 3 percent.
U.S. housing starts for June checked in at an annualized rate of 549,000 their lowest level since October and almost exactly half the rate that was recorded in June 2008. Full-year U.S. housing starts for 2009 were 554,000. The U.S. market peaked in 2005 with almost 2.1 million housing starts.
PVC-related first-quarter sales for Atlanta-based Georgia Gulf Corp. were up 19 percent to $287 million vs. the year-ago period. But that segment had an operating loss of almost $9 million for the quarter, after posting an operating profit of almost $21 million in the first quarter of 2009.