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January 22, 2016 01:00 AM

PP prices continue to surge as PET falls

Frank Esposito
Senior Staff Reporter
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    Graphic by Jessica Jordan
    Esposito

    North American polypropylene resin prices surged ahead in December, as PET bottle resin prices fell and regional prices for polyethylene, polystyrene and PVC stayed right where they were in November.

    PP prices climbed an average of 2 cents per pound for the month, as supplies of the material remained tight throughout the region. The 2-cent hike is the third consecutive monthly price hike, following a 2-cent increase in November and a 3-cent upward move in October. These increases have reversed a trend that had seen regional PP prices fall for three straight months.

    Even with these three late-year increases, regional PP prices declined by a net of 11 cents per pound in 2015. Most of that drop stemmed from a 10-cent January decline, which had followed a similar 10-cent drop in December 2014 as global crude oil prices were crashing.

    Some North American buyers reported seeing increases of 3 cents in both November and December, but a greater number reported seeing 2 cents both months. Recent production outages — combined with strong domestic demand — have limited the availability of PP throughout North America.

    “Polypropylene is sold out,” one buyer in the Midwest told Plastics News. “Producers have complete pricing power.”

    Regional PP sales were up 5.2 percent through November, according to the American Chemistry Council in Washington. Domestic growth of 6 percent was lessened by a drop of almost 20 percent in export sales during that 11-month period. Among individual end markets, regional PP sales into injection molded consumer and institutional products — including furniture and housewares — were up almost 11 percent through November.

    PET bottle resin prices in the region slid down another penny per pound for the month, due in part to lower seasonal demand. Prices for the material now have fallen for five consecutive months. The 1-cent December drop followed declines totaling 9 cents combined in August through November.

    PET bottle resin prices were down a net of 4 cents per pound in 2015. The market continued to struggle with resin overcapacity and with reduced demands for carbonated soft drinks, its largest end market. Demand for bottled water is up, but thinner bottles are using less PET per bottle than they did in previous years.

    With a flat December, regional PE and PS prices now have been flat for three consecutive months. PVC prices in the region ended the year with two consecutive months of flat pricing.

    For full-year 2015, prices for all grades of PE and of solid PS ended down a net of 13 cents per pound, while suspension PVC prices declined by a net of 3 cents per pound.

    Through October, U.S./Canadian sales of high density PE were up 6.6 percent, according to ACC. Domestic sales were up only 1 percent for the period, but export sales rocketed up almost 42 percent. Sales of HDPE into household chemical bottles provided a domestic bright spot, growing 7 percent.

    Regional sales of low density PE through October improved 3.3 percent, with domestic growth of almost 4 percent lessened somewhat by growth of only 1.2 percent in export markets. Sales of LDPE into non-food packaging film soared more than 11 percent in that 10-month period.

    For linear low density PE, 10-month sales grew 6.3 percent. Domestic sales growth of almost 6 percent was amplified by a 9 percent rise in export sales. Sales of LLDPE into all types of film — packaging and non-packaging — climbed almost 8 percent in that period.

    North American PS sales dipped 0.8 percent through November, even as sales in its leading food packaging/food service segment ticked up 0.7 percent. That category accounted for more than 60 percent of regional PS sales in the first ten months of the year.

    The North American PVC field had an odd year, as the construction market — PVC's biggest consumption sector — didn't rebound as expected. As a result, U.S./Canadian PVC sales are on track to be down more than 2 percent in 2015.

    Sales of PVC into the domestic market fell almost 3 percent in the first 11 months of 2015, according to ACC, but export sales fell less than 2 percent, lowering the overall sales loss. Eleven month sales into PVC's dominant rigid pipe and tubing sector — which accounted for almost 45 percent of domestic sales — fell more than 1 percent in that period.

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