Resin prices remain unpredictable

Oil prices leveled off a bit in March, but North American commodity resin prices remained as unpredictable as ever.

After dropping to $44 per barrel in mid-March, the West Texas Intermediate (WTI) oil price rebounded to near $54 by April 14 — roughly the same level it held in late February. This of course is a far cry from the $100+ levels it held in mid-2014, but it's also not the price collapse some had predicted.

This relative stability allowed North American PVC prices to climb an average of 3 cents per pound for the month, and for PET bottle resin prices to tick up an average of 1 cent per pound. It's a reversal of form for PVC prices, which had been flat in February after falling for three straight months from November-January. Market sources told Plastics News that PVC production in early 2015 has been lower than expected at plants operated by Formosa Plastics Corp. in Baton Rouge, La., and by Westlake Chemical Corp. in Geismar, La.

The 1-cent PET hike surprised some buyers, since demand for the material hasn't been strong, due in part to colder-than-normal weather in much of the U.S. That cold snap flattened demand for carbonated soft drinks and bottled water — two big end markets for PET. Prior to the March uptick, regional PET prices were flat in February, but had plunged a total of 16 cents per pound in November-January.

The modest oil increase also helped regional prices for polyethylene and solid polystyrene to remain flat. PE's stable pricing month was welcome after prices fell for the fourth consecutive month in February, with those four dips totaling 16 cents per pound.

Market watchers are hoping that the April 3 shutdown of a Dow Chemical Co. PE unit in Freeport, Texas, won't have much of an effect on regional PE supplies. One of the site's PE units was shut down after an accidental ethylene release. Dow officials described the event as “a process upset” and had no timetable for the unit's restart.

The inactivity in regional PS pricing was a bit surprising to buyers, since prices for influential benzene feedstock were up somewhat for the month. The standstill ended a streak of six straight months in which PS prices fell in the region. Those declines had driven prices down a total of 23 cents per pound. Benzene lost about 60 percent of its value between August and February, dropping from just over $5 per gallon to barely over $2.

Not surprisingly, polypropylene staked out its own path in March, as the only commodity resin to see a price drop in the region. PP prices ticked down an average of 1 cent per pound. This also surprised some buyers, since demand for the material was off to a good start in North America in the first two months of 2015. Sales of PP grew 7 percent, according to the American Chemistry Council, with domestic sales growth of 9 percent dampened by a drop of more than 30 percent in export sales.

Regional PP prices had climbed a penny per pound in February after being hammered by 10-cent drops in both December and January. Market watchers now are concerned about the potential impact on PP prices from a March 30 fire at an ExxonMobil Chemical propylene unit in Beaumont, Texas. No one was injured in the incident, but the unit remains out of commission.

Over on the engineering resins side of the plastics world, buyers of nylon 6/6 are keeping an eye on pricing after Invista placed force majeure sales limits on the material after a “chemical function issue” at its plant in Victoria, Texas. The incident is limiting production not only of nylon 6/6 resin but of adiponitrile (ADN) and hexamethylene diamine (HMD) feedstocks as well.

A company spokeswoman said that Invista will provide customers with updates on the amounts and rough estimates for timing of supply allocations of nylon 6/6. Prices for the material had fallen in February, in spite of strong demand from the North American auto sector.

Polymer Points is a monthly column by Plastics News senior reporter Frank Esposito.