North American polypropylene prices appear to have bottomed out and are heading up again, while polystyrene prices in the region fell again in July and could have more of a downslide.
Regional PP prices are up an average of 2 cents per pound since Aug. 1, according to several buyers contacted recently by Plastics News. That move matches a similar increase in price for propylene monomer feedstock. PP has moved in lockstep with propylene for at least a year.
PP “may have gone down too much before,” a Midwest-based PP buyer said. “So [the 2-cent August move] might be a bit of a correction.”
Pricing for PP in 2010 hasn't been for the faint of heart. Prices rocketed up an average of 22 cents per pound in the first four months before falling an average of 20 cents between May and July.
Several buyers told Plastics News that PP suppliers tried, but were unable, to get an additional 2 cents per pound in August on top of the 2 cents that matched the monomer increase.
“Demand [for PP] has been up, so you would have thought the environment was right to see a price increase beyond monomer,” said Scott Newell, a PP market analyst with Resin Technology Inc. in Fort Worth, Texas. “But [PP makers] weren't able to make it happen.”
In the first half of 2010, North American PP sales enjoyed 8 percent growth within the region, according to the American Chemistry Council in Arlington, Va. But exports from the region fell almost 50 percent during that period, leaving overall market sales roughly flat.
Domestic sales growth was fueled by a gain of almost 70 percent in sales of PP into the transportation market — a function of recovery in North American auto sales. PP sales within the region were hampered by a drop of almost 8 percent into injection molded housewares.
North American PP “has priced itself out of the export market,” said consultant Jim Morris, president of Benchmark Poly- mers LLC in Coppell, Texas. “And it's become an expensive product on a relative basis when compared to other resins.
“For years, [PP] was a cheap material with a density advantage, but that's not the case anymore,” Morris said.
The PP market also continues to be affected by the use of lighter, natural-gas-based materials such as ethane in the production of chemical feedstocks. Lighter feeds produce less propylene than do heavier feeds such as crude oil, causing tightness in propylene monomer production.
“Lighter feeds are still favored significantly, so propylene has been strained a bit,” Morris added.
In PS, prices have fallen an average of 2 cents per pound since July 1, according to buyers. That's on top of a 4-cent drop that took hold in June. Regional prices had climbed an average of 10 cents per pound, about 12 percent, in the first two months of the year.
Prices of benzene — a chemical used to make PS feedstock styrene monomer — have a big impact on PS pricing, although not as direct an impact as propylene has on PP. July benzene prices settled at $2.82 per gallon, a drop of about 4 percent from the June price and about 20 percent since May. For August, benzene prices already have settled at $2.79 per gallon — a drop of only 1 percent from July, but a move that indicates regional PS prices might be headed for another monthly decline.
On the demand side, PS export growth of 27 percent in the first half helped to soften a domestic sales loss of almost 4 percent, leaving the overall U.S./Canadian PS market down almost 2 percent, according to ACC. Sales of PS into food service fell 18 percent, but food-packaging-related sales of PS climbed 55 percent in that six-month period.
RTI's PS market analyst Stacy Shelly said PS food packaging may have made that gain at the expense of PP, which now trails PS in the pricing column. PS growth for the remainder of 2010 is expected to be limited, Stacy said.