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September 25, 2015 02:00 AM

PE drops 4 cents, PP down 1

Frank Esposito
Senior Staff Reporter
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    Continued weakness in feedstocks has sent North American prices for polyethylene and polypropylene resins down since Sept. 1.

    Regional prices for all grades of high density, low density and linear low density PE are down 4 cents per pound, while prices for PP in the region are down 1 cent, according to buyers contacted by Plastics News.

    The PE drop is the second consecutive monthly decline, following a 5-cent downtick in August. Regional PE makers had taken the rare step of pre-announcing the 4-cent move to customers earlier in September. Market watchers regarded that move as a means for producers to limit the decline.

    Crude oil prices — used as a global PE price-setter — have remained less than robust. Per-barrel prices for West Texas intermediate (WTI) crude were near $58 per barrel in early July, but fell under $40 by late August and were near $45.40 in early trading Sept. 25.

    At the Resin Technology Inc. consulting firm in Fort Worth, Texas, PE analyst Mike Burns said that regional PE prices now are expected to remain flat until oil prices approach $60 per barrel. Beyond that point, he added, regional PE maker may try to raise prices in the first part of 2016.

    After the 4-cent September drop, regional PE prices now are down a net of 13 cents per pound so far in 2015. Demand for the material in the U.S. and Canada has remained solid, however. Through July, High density and linear low density PE demand in that region each were up almost 6 percent, with low density PE sales up almost 2 percent, according to the American Chemistry Council in Washington.

    The 1-cent drop seen by regional PP prices in September also continued a trend for that material. It was the third consecutive monthly decline, and the fourth in the last five months. The three-month decline has totaled 4 cents per pound.

    For the year, regional PP prices now are down a net of 18 cents. The demand picture has been more positive, with North American sales up 5.3 percent through July. Domestic growth of 5.9 percent was lessened by a 10 percent drop in export sales during that seven-month period.

    Tight supplies of both PP resin and propylene monomer feedstock have allowed North American PP makers to increase their profit margins by an estimated 10 cents per pound so far in 2015. In previous years, margin growth was flat as price drops in monomer were passed through to PP resin at the same levels.

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