North American prices for polyethylene and polypropylene have moved in different directions since March 1, with PE climbing an average of 2 cents per pound and PP declining an average of 5 cents.
The PE move covered the remainder of a 5-cent increase attempt that producers split into 3 cents for February and 2 cents for March. The region's PE makers now have a 6-cent move on the table for April 1, with some adding a 5-cent attempt for May 1 as well.
Although supplies of PE and of ethylene feedstock have been somewhat tight in recent weeks, market psychology also is playing a role in the recent hikes, according to market analyst Mike Burns.
There's a little bit of headlines involved here, said Burns, who is with Resin Technology Inc. in Fort Worth, Texas. People are watching what's going on in Libya and the Middle East. The costs to produce ethylene aren't that much greater than they were a year ago, but polyethylene now is 20 cents higher than it was then.
Polyethylene still isn't in a strong supply situation it's not balanced and suppliers are maintaining a strong position. There's also a lot of fear and uncertainty, so that also can drive prices through, he said.
January was a rough month for U.S./Canadian PE sales, according to data from the American Chemistry Council in Washington. Sales for high, low and linear low density PE each fell, with market watchers noting those results may have suffered when compared with excessive pre-buying that took place in January 2010.
In that comparison, regional sales of HDPE were down about 5 percent, with LDPE sales slipping almost 13 percent and LLDPE sales down about 7 percent, according to ACC.
Moving ahead, Burns said the April and May PE increase attempts could be affected by a number of maintenance turnarounds that are planned throughout the market. The chance of a turnaround doing what it's supposed to do aren't good anymore, he said.
Longer-term, Chevron Phillips Chemical Co. LP and Nova Chemicals Corp. each recently announced future increases in ethylene capacity that have a good chance of including new PE capacity as well. Nova's ethylene project will be in western Canada, while ChevronPhillips' will be at a site on the U.S. Gulf Coast. If PE capacity additions do arise from th0se moves, they'll be the first in North America in almost a decade.
In PP, softness in the market for propylene monomer feedstock sent prices sliding an average of 5 cents but in what's become typical herky-jerky fashion for PP, market watchers are saying prices could be headed up again in April.
And in spite of the 5-cent March drop, North American PP makers have been able to hold on to most of the massive 17-cent hike they pushed through in January.
The actual magnitude and duration of the correction in [PP] prices is going to be a disappointment for some, market analysts at Chemical Market Associates Inc. consulting firm said in a recent report. After jumping [by a large amount] in January, the expectation was of a similar drop, albeit gradual, in prices.
However, thanks to the volatile and increasing oil prices, this will not be the case, analysts at Houston-based CMAI explained.
As in PE, January PP sales suffered when compared with the same month in 2010. North American sales fell almost 6 percent, according to ACC, with a 13 percent gain in exports helping to soften a drop of about 7 percent in domestic sales.
At RTI, market analyst Scott Newell said North American PP remains at the mercy of [propylene] feedstock.
Monomer continues to battle constrained supply, he said. And in PP that invites volatility and obstructs growth.
Newell added that PP's low regional sales for January were caused by higher prices, and that sales for February could come in even lower. Sales for March may improve as buyers take advantage of the 5-cent dip, he said.