North American polyethylene resin prices awoke with a vengeance in May, increasing for the first time in eight months.
Regional polystyrene prices weren't far behind — rising for the second straight month — while polypropylene resin prices ticked slightly down.
The 5-cent hike absorbed by North American PE in May was the first to hit the market since September. In the meantime, the material had absorbed four price drops totaling 16 cents.
There were numerous reasons the price hike took hold, according to Mike Burns, PE market analyst with Resin Technology Inc. in Fort Worth, Texas. Global feedstock costs were higher as a result of oil price increases, he said, while supplies of both PE and ethylene were tight in both Asia and Europe.
These conditions led to above average exports from North America to Latin America, Asia and Europe, Burns explained.
A PE buyer in the Southeast U.S. said that although the May increase took hold, he expects prices to be flat for the next few months, unless Asian prices drop below North American prices, as was the case earlier in 2015.
“If that happens, we would probably see some decreases over here,” the buyer said. “If [Asian prices] stay at current levels, which are pretty close to North American pricing, it makes it easy for the North American producers to hold the price up and export any extra they have and still make the historic integrated margins they are still making today.”
U.S./Canadian PE sales results were mixed in the first quarter of 2015, according to the American Chemistry Council. High density PE sales in the region were up almost 6 percent, with domestic sales growth of almost 3 percent boosted by export sales growth of almost 24 percent.
But U.S./Canadian sales of both low and linear low density PE essentially were flat in the quarter. In LDPE, a drop of almost 9 percent in export sales wiped out a 2 percent domestic sales gain. For LLDPE, domestic sales growth of 1 percent was canceled out by an export sales drop of almost 5 percent.
The North American PS resin market saw a 3-cent hike stick in May. That increase was the second straight monthly increase for the material, following a month of flat pricing in March and a combined drop of 11 cents in the first two months of the year.
Benzene's role
Higher prices for benzene feedstock again played a role in the May PS increase. Benzene prices jumped 26 cents per gallon in May, reaching the $2.85 mark and bringing the two-month total price hike to 77 cents. Regional PS makers had been seeking increases of 6 cents in May, but settled for half of that amount after successfully lifting prices 5 cents per pound in April.
North American PS sales climbed almost 3 percent in the first four months of 2015, according to ACC. Growth in the market's flagship food packaging/foodservice end market were especially strong, increasing by more than 5 percent. That sector accounted for about 61 percent of total PS sales in the region for that four-month period.
Regional PP prices trickled down 1 cent per pound in May, marking the second straight monthly decline for that material — and the fifth in six months. North American PP prices now are down a net of 25 cents per pound since December.
The 1-cent PP downturn matched a similar drop in price for propylene monomer feedstock. In April, regional PP makers had successfully increased their profit margins by limiting the resin price drop to 4 cents per pound, even as propylene prices fell 4 cents.
Sales of PP in North America surged more than 7 percent in the first four months of 2015. Domestic sales growth of almost 8 percent was dampened slightly by an export sales decline of almost 7 percent.
Regional sales of PP into injection molding applications soared 11 percent in that four-month period, according to ACC. That growth was led by a 20 percent leap for sales of PP into consumer and institutional products.
At the producer level, Houston-based LyondellBasell Industries saw operating profit at its Olefins & Polyolefins-Americas unit surge 42 percent to $934 million in the first quarter, even as sales fell 24 percent to $2.6 billion. LBI ranks as one of North America's largest PE and PP makers. The O&P-Americas unit includes PE, PP, ethylene, propylene and benzene.
At Westlake Chemical Corp. of Houston, the olefins unit — including PE — saw first-quarter sales decline 19 percent to $583 million as operating profit slipped 30 percent to $191 million. Lower sales totals at both LBI and Westlake were in part affected by lower selling prices for PE, PP, ethylene and propylene.
Westlake's first-quarter olefins sales volume in pounds actually was up almost 8 percent vs. the year-ago period. LBI's first-quarter PE sales volume in pounds was up 6 percent in the Americas, while its first-quarter PP sales volume in pounds increased by 3 percent in the region.
