Feedstock availability and market pressures have sent North American prices for polyethylene and polystyrene higher since Feb. 1.
Prices for all grades of high, low and linear low density PE are up an average of 3 cents per pound in that period. Prices for general-purpose crystal PS are up an average of 5 cents per pounds, while high-impact PS prices are up an average of 7 cents.
A 20-cent downward correction on North American polycarbonate prices — based on changes that occurred in the second half of 2011 — also is included in this week's Plastics News resin pricing chart.
The PE move is half of a 6-cent increase that producers originally had nominated for Jan. 1. Prices were flat in January after a 5-cent increase surprisingly took hold in December.
Maintenance turnarounds at some production sites for ethylene feedstock played a role in the 3-cent hike, but producer resolve also played a role, according to Mike Burns, a market analyst with Resin Technology Inc. in Fort Worth, Texas.
“There's nothing justifying [the increase] from a raw material standpoint,” he said. “Ethane and ethylene [feedstocks] are very cheap, and exports were down in January and some markets are already oversupplied. But [PE] supplier discipline has been extremely strong.”
One Texas-based PE buyer said that so far in 2012 he's buying slightly more resin than he was a year ago, but at the same time he's “not planning to pay another 3 cents [for PE] in March.”
“There's no reason for it, or for this one in February,” he said. “I'll probably buy from a broker or buy off-spec [PE] if I have to.”
Longer-term PE sales trends show that HDPE and LDPE still have not recovered to sales levels from 2007 — before the global economic slowdown. Based on 2011 sales totals from the American Chemistry Council in Washington, HDPE is almost 7 percent below its 2007 level, while LDPE sales are down more than 16 percent in the same comparison. LLDPE has eked out a sales gain of 1.5 percent in that time frame.
But these sales trends have not stopped Nova Chemicals Corp., Chevron Phillips Chemical Co. LP and — just last week — Formosa Plastics Corp. USA from announcing plans to add new PE capacity in the region. Most of the new capacity is expected to hit the market in 2016-17.
In 2011, U.S./Canadian HDPE sales grew about 3 percent vs. the prior year, while sales of LDPE and LLDPE in the region essentially were flat.
For PS, higher benzene feedstock costs sent prices for crystal general-purpose PS up 5 cents and HIPS up 7 cents. A similar price hike had hit the market in January. Higher prices for butadiene feedstock used to make HIPS accounted for the price differential.
Benzene prices closed for February at $4.20 per gallon, up almost 14 percent from their January levels. January prices in turn had soared 25 percent vs. December.
A PS buyer in the Midwest said market consolidation has left processors with few places to turn when feedstock prices go up.
“Inventories are pretty low, and there are really only three merchant suppliers, so it's not too hard for them to be disciplined,” he said.
The decline for regional PC prices in the second half of 2011 also was tied in to feedstock swings, including those in benzene. Market analyst Adrian Beale estimated that North American PC demand grew at a 2.5 percent rate in 2011, but that growth in the U.S. alone was only around 1 percent.
In a recent report, Beale — who is with IHS Chemical in Houston — said global PC growth is being driven by the automotive, appliance and electronics sectors. The consumer trend toward larger televisions also is helping PC demand, since the material is more commonly being used in larger screens.
According to the IHS report, world PC demand is set to grow at an annual rate of about 5 percent through 2016, reaching almost 10 billion pounds.
