North American prices for polypropylene and polystyrene resins traveled different paths in April, with PP prices dropping and PS rising.
PP prices in the region fell an average of 4 cents per pound in April. Prices for propylene monomer fell by 6 cents, but sources said that PP makers were able to limit the resin price slide to 4 cents, holding on to the remaining 2 cents for margin improvement.
“Margin expansion is real,” a PP contact in the Midwest U.S. said. “The market is tight and the [PP] industry has high operating rates right now. A lot of resin capacity was taken out during the recession, but now suppliers are close to getting back to reinvestment economics.”
The price drop is the second consecutive monthly drop to hit the PP market, and the fourth in five months. Regional PP prices now are down a net of 24 cents since December, including drops of 10 cents each in December and January.
North American PP demand was strong in the first quarter of 2015, according to the American Chemistry Council. Total sales growth was 7.3 percent vs. the same quarter in 2014, as domestic growth of 9 percent was dampened by a drop of almost 31 percent in export sales.
Looking to May, PP market analyst Scott Newell said that monomer prices are looking to settle flat to slightly down, but he added that resin prices could be flat to up slightly if monomer settles flat and producers push for more margin. Newell is with Resin Technology Inc. in Fort Worth, Texas.
In the PS market, prices jumped an average of 5 cents per pound, following a price increase of almost 25 percent for benzene feedstock, which is used to make styrene monomer. Regional PS prices had been flat in March, as a slight increase in benzene prices wasn't enough to move the needle on resin.
PS resin prices had fallen a total of 11 cents in January and February, including a 9-cent drop that had been pre-announced by PS maker Americas Styrenics.
Benzene prices jumped 51 cents per gallon to $2.59 in April and could see another 30-cent increase in May, according to Robin Chesshier, a PS analyst with RTI. PS makers are seeking an additional 6-cent increase for May in anticipation of this benzene hike.
On the demand side, North American PS sales enjoyed a strong first quarter, growing almost 3 percent, according to ACC. This growth was led by a 6 percent gain in sales of PS into food packaging and food service. That combined end market accounts for more than half of North American PS sales. Regional sales of PS to resellers and compounders also grew 22 percent in the first quarter of 2015.
The PP drop and PS hike are shown on this week's Plastics News resin pricing chart. PN this week also is correcting prices for amorphous and crystalline PET and dispersion PVC to reflect price movements seen since early 2013. Prices for APET and CPET are being corrected downward by 18 cents per pound, while dispersion PVC prices will show a 13-cent upward correction.