North American commodity resin prices bounced around in September, with regional polyethylene and PVC prices increasing while prices for solid polystyrene in the region declined.
The 3-cent PE hike was the result of tighter supplies of ethylene feedstock, caused by outages earlier this year at units operated in Texas by LyondellBasell Industries and Chevron Phillips Chemical Co. Those early July incidents included a fire that injured two workers at Chevron Phillips' ethylene/propylene unit in Port Arthur.
It's only the second time in the last 12 months that regional PE prices have changed, and the first since a 4-cent hike hit the market in February. All four North American PE price movements in 2013 were increases as well. Regional PE prices have not fallen since October 2012, with prices climbing an average of 23 cents per pound since then, according to the Plastics News resin pricing chart.
The September PE hike has not been supported by recent demand for the material. Through August, U.S./Canadian sales of low and linear low density PE each were up less than 1 percent vs. the year-ago period, according to the American Chemistry Council in Washington. U.S./Canadian sales of high density PE are down more than 1 percent in the same comparison.
The steady drumbeat of PE price hikes in 2013-14 has not been music to the ears of the region's PE film makers. AEP Industries is attempting to raise prices for all grades of its stretch film by 6 percent effective Sept. 22. A previous non-resin increase attempt by AEP and other film firms met with limited success.
In North American PVC, a 2-cent hike has taken hold. A similar increase attempt fizzled in July. The increase ends a 5-month streak of flat pricing, which was the longest seen by the regional market since prices were flat for three months in late 2010-early 2011. Prior to the flat spell, regional PVC prices climbed a total of 9 cents per pound between January and March.
Higher ethylene prices have affected PVC makers' profit margins, giving them resolve to push the increase through, market sources said.
“The buyers are going to push back hard on the 2 cents,” one market watcher said. “But I haven't seen any rollbacks, only price announcements.”
Leading producer Oxy Vinyls LP of Dallas has announced an additional 3-cent hike for Oct. 1, although other suppliers have not yet followed suit.
As in PE, recent PVC demand has not justified price increases. U.S./Canadian PVC sales were down 2 percent through August, with a 2 percent increase in domestic sales wiped out by a drop of almost 10 percent for sales into the export market.
For solid PS, the market's ability to resist a downward slide in prices for benzene feedstock ran out in September, causing prices to fall an average of 4 cents per pound. Regional prices had surprisingly remained flat in August, even though benzene prices fell more than 4 percent to $5.06 per gallon.
But a 7 percent drop in September — which sent benzene to $4.70 per gallon — was too much for PS prices to bear. PS prices had shot up 7 cents per pound in July because of a benzene spike. Combined with other price changes from earlier in the year, regional PS prices now are up a net of 8 cents per pound so far in 2014.
Higher prices might be helping PS makers, but they are not welcome news to buyers of the material, according to a PS buyer in the Midwest U.S. “The producers hold the cards,” the buyer said. “But they're putting polystyrene at risk for the future by giving end customers an impetus to change to a different resin.”
On the sales side, solid PS has struggled in 2014. North American sales through July were down 2.5 percent to just over 2.6 billion pounds.