North American commodity resin prices continued to search for a market bottom in September — but couldn't seem to find one.
Average per-pound selling prices for polyethylene, polypropylene, polystyrene, PET bottle resin and PVC each fell in September. It was the second straight month that all five commodity materials experienced declines in the region.
All grades of HDPE, LDPE and LLDPE slid 4 cents per pound. PP prices dipped 1 cent. PS took a dizzying 9-cent dive. PET dropped 3 cents, while PVC prices declined by a penny.
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 fell under $40 by late August and were still just under $50 in late trading Oct. 9.
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 makers 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. Through August, high 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.
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 percent through July. Domestic growth of 5.6 percent was lessened by an 11.5 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.
The 9-cent PS plunge marked the second straight monthly decline for that material. Prices had slipped an average of 2 cents per pound in August, holding to a number that was pre-announced by PS makers Americas Styrenics and Styrolution.
The September PS price drop was more extreme, however, as the material followed benzene feedstock prices, which slipped 79 cents per gallon to finish September at $2.01.
October benzene prices are expected to be up slightly from that level, giving hope that regional PS prices can avoid a third straight monthly downturn. North American PS prices now are down a net of 13 cents per pound so far in 2015.
Much of the recent decline in benzene pricing is the result of increased imports, according to Phil Karig, managing director of Mathelin Bay Associates LLC, a consulting firm in St. Louis.
“As buyers around the world for benzene derivatives such as polystyrene wait to see where polymer prices will bottom, there's a lot of short-term excess benzene that has to go somewhere,” he said. “And the U.S. market is as good a place as any, especially for exporters in countries that have seen their currencies weaken against the U.S. dollar in the last year.”
North American prices for PET bottle resin slipped an average of 3 cents per pound in September, moving that material into negative pricing territory for the year. PET prices now are down a net of 1 cent per pound so far in 2015. The September move is the second straight monthly PET price drop, following a 4-cent downturn in August.
Seasonally, PET has moved into the part of the year where cooler temperatures lead to less consumption of carbonated soft drinks and bottled water, two major PET markets. PET makers continue to struggle with lower consumption of soft drinks in general, as consumers seek healthier alternatives. That can lead to bottled water growth, but that product has been impacted in recent years by thinner bottles that use less PET per unit.
Selling prices for suspension PVC resins in the region dropped an average of 1 cent per pound in September, according to sources contacted by Plastics News.
Through August, U.S./Canadian PVC sales were down almost 1 percent vs. the same period in 2014, according to the American Chemistry Council. Domestic sales were down more than 2 percent, even as sales into export markets grew almost 3 percent.
Regional sales of PVC into most construction-related uses were flat or slightly down for the eight-month period, even as U.S. construction activity continued to improve. PVC sales into rigid pipe and tubing — which accounted for almost 45 percent of domestic sales — fell more than 1 percent.
PVC sales into extruded windows and doors also fell 1 percent, while sales into fencing and decking essentially were flat. The only construction-related segment that showed PVC sales growth for the eight months was siding and related uses, where sales grew almost 5 percent.