North American prices for PET bottle resin have continued their dizzying upward climb in early 2011.
Average selling prices for suspension PVC also ended a flat period by climbing in March. Both the PET and PVC moves are reflected on this week's Plastics News resin pricing chart.
PET prices shot up an average of 8 cents per pound in February and another 5 cents per pound in March for a two-month leap of 13 cents per pound. Producers had been seeking a total of 16 cents for those months, and some buyers reported paying more than the 13-cent average. This big move came after PET prices surged 16 cents per pound in late 2010.
In a recent report written even before the March price increase took hold officials at Chemical Market Associates Inc. in Houston said current PET prices are at the highest level ever, even exceeding the hurricanes of 2005 and the peak in crude oil prices in July of 2008.
The PET market is being rocked by extremely high prices for feedstocks such as paraxylene and purified terephthalic acid. In their report, CMAI officials said limitations for these and other raw materials have made it nearly impossible for consumers to pre-buy PET resin.
Low demand growth and lightweighting of water and carbonated soft drink bottles, resulting in sizable reductions in the amount of resin used per bottle, also have made life difficult for PET makers.
Going back to early 2010, the 29-cent price hike means average North American PET prices have gone up almost 40 percent in the last 14 months.
In PVC, producers battled their way to achieve a 3-cent-per-pound price hike in March. That increase marks the first time this year that PVC makers have been able to raise prices. Even so, market ups and downs have left resin prices almost unchanged since early 2010.
In a recent report, market analysts with Resin Technology Inc. in Fort Worth, Texas, said North American PVC makers won the March increase after tightening the domestic market. They did so by reducing operating rates to prevent oversupply, and by increasing capacity utilization as export opportunities grew, RTI analysts said.
Regional PVC makers now are seeking increases of either 3 or 5 cents per pound effective April 1, with some adding on 5-cent increases for May 1 as well.
North American PVC continues to labor under the effects of a desultory construction field. Construction typically accounts for at least 60 percent of the region's PVC sales every year.
U.S. housing starts for February checked in at an annual rate of 479,000, according to the National Association of Home Builders in Washington. The number of starts actually grew 6 percent to 588,000 in 2010, but that number remains only a fraction of the 2005 peak of almost 2.1 million.
To put that slump in context, U.S. housing starts had been over 1 million every year since 1978 before falling below 906,000 in 2008.
The U.S./Canadian PVC market has responded to the challenge by drastically increasing the amount of material it sells as exports. PVC's 9.6 percent growth rate in the region was fed by an 85 percent gain in exports. Domestic PVC sales fell almost 10 percent on the year, according to full-year data from the American Chemistry Council in Washington.
Exports accounted for more than 34 percent of U.S./Canadian PVC sales in 2010 after accounting for just over 20 percent the previous year. Lower-priced ethylene feedstock a result of abundant supplies of natural gas in the region made U.S./Canadian PVC attractive in international markets.