An array of factors — including feedstocks, imports, excess capacity and a slow economic recovery — has driven down North American prices for ABS, nylon and polycarbonate in recent months.
Regional prices for ABS have fallen by a net decrease of 4 cents per pound since Jan. 1. A 20-cent, early-year run-up was wiped out by recent price declines, according to buyers contacted by Plastics News. The drop equates to a 3 percent decline in price for high-impact ABS grades used in injection molding.
“End markets for ABS haven't grown much,” said Stacy Shelly, a market analyst with Resin Technology Inc. in Fort Worth, Texas. “Asian imports also have been competitive, and feedstock costs are down.”
Shelly added that regional ABS prices “may have bottomed out in August” and that the market has “optimistic hope for increased demand from automotive this fall.”
Market watchers estimate that North America ABS operating rates are around 60 percent, with 2012 production expected to come in at around 1 billion pounds on a base of 1.8 billion pounds of nameplate ABS capacity.
In the nylon field, a strong rebound in auto production — North American builds are on track to be up more than 10 percent this year — hasn't done much to lift prices. That's a bit surprising, since the automotive market accounts for about 40 percent of regional nylon demand.
Regional nylon 6 prices have seen a net decrease of about 5 percent since the start of the year, a drop of about 11 cents based on January pricing. The price drop seen by nylon 6/6 has been slightly less — a net decline of 6 cents per pound, or 3 percent, from the start of the year.
Regional prices for nylon 6 increased during the second quarter, but started to fall soon after, according to Paul Blanchard, engineering plastics director at IHS Chemical in Houston. By comparison, he added, nylon 6/6 prices have been sliding for most of the year, although this erosion is expected to subside by the end of the third quarter.
RTi's Mark Kallman added that lower exports of nylon 6/6 from North America this year and more competition for domestic market share “have helped bring lower prices to new pieces of business.”
“Exports to China have slowed down, and that's put more [nylon 6/6] material back into the U.S.,” said an East Coast resin buyer.
But the North American auto comeback should leave regional nylon resin sales up 8-9 percent by the end of the year, in spite of the pricing situation, according to Blanchard.
For PC, shaky demand has caused prices to trend downward by 8 cents per pound — a 4 percent drop based on prices for general-purpose grades of PC for injection molding — since May. Similar conditions had sent prices down another 10 percent between May 2011 and May 2012.
“Global demand is softer, and producers are uncertain about future demand despite good volumes from automotive domestically,” said Kallman.
The East Coast resin buyer agreed with that assessment.
“The U.S. auto market has been a tremendous story for the last 12 months,” he said. “But keep in mind that China has slowed significantly, and that there's lots of new capacity overseas, especially in Saudi Arabia.”