February was a relatively quiet month in North American commodity plastics markets, with only polyethylene and solid polystyrene showing any change in prices.
Prices for all grades of PE as well as those for solid PS each fell an average of 2 cents per pound for the month. The declines resulted mainly from lower feedstock costs. The PE drop is the second consecutive monthly price drop for the material after a three-month stretch in which prices were flat. The January price drop was 3 cents.
U.S./Canadian PE markets got off to a good start in 2016, with sales of high and low linear density PE each up almost 6 percent in January, according to the American Chemistry Council. HDPE export sales surged almost 40 percent for the month, overcoming a 1 percent drop in domestic sales.
The story was somewhat similar in LLDPE, where a 26 percent gain in export sales boosted a 1 percent uptick in sales into the domestic market. In LDPE, sales slipped 3 percent, with domestic sales down almost 3 percent and export sales sliding almost 5 percent.
Regional PE makers remain focused on building the export market in order to handle large volumes of new capacity that are scheduled to come on line beginning this year. Increased availability of low-priced natural gas from shale formations has led to a wave of new PE capacity expansions throughout North America. The Braskem Idesa joint venture expects to be shipping new PE from a plant in Coatzacoalcos, Mexico, by the end of April.
Crude oil prices remain a global price setter for PE, even though most North American PE uses natural gas as a feedstock. West Texas Intermediate (WTI) oil prices started the year around $39 per barrel but soon declined, falling under $30 on two occasions before recovering to just under $38 in late trading March 16.
For PS, the 2-cent drop ended a streak of four consecutive months in which prices for the material had been flat. PS maker Americas Styrenics LLC had pre-announced the price decrease in early February, and the broader market held to that amount.
The PS decline was driven in part by lower selling prices for benzene feedstock, which is used to make styrene monomer. Benzene prices for February averaged $1.84 per gallon, down 13 percent from the January price. Some market watchers believe that the benzene market now has reached bottom and could begin heading up again.
North American PS sales notched a moderate sales gain of 1.2 percent in January, according to ACC. Much of that growth came from the electrical/electronic end market, where January sales surged more than 13 percent.
Regional prices for polypropylene, PVC and PET bottle resins were flat with January levels. The lack of pricing activity in the PP and PET markets surprised some market watchers.
PP supplies have been tight because of strong demand and some production outages, leading to four straight months of price increases through January. PP makers in February were expected to push through the second half of a 6-cent move that had been nominated for January, but PP buyers were able to hold their ground. The first half of that 6-cent move came through in January.
North American PP sales grew 1.4 percent in January, according to ACC, with domestic growth of 3.3 percent softened by a plunge of almost 60 percent in export sales, when compared with the same month in 2015.
Flat PET prices in February ended a streak of six straight months in which bottle resin prices had declined. Prices for the material tumbled a total of 13 cents per pound in that six-month period. PET demand may be improving as the market moves into warmer weather, which serves to boost demand for both carbonated soft drinks and bottled water — PET's two main end markets.
PVC's mysterious journey continued in February, with prices flat for the third time in the last four months. Prices for the material in January had declined by an average of 1 cent per pound. PVC demand was expected to solidify, as warmer weather bumped up demand for construction-related PVC products.
U.S./Canadian PVC sales surged 7.2 percent in January, with export sales growth of almost 21 percent improving a modest 1.4 percent domestic growth rate. Among domestic end markets, PVC's flagship rigid pipe and tubing category jumped almost 9 percent in January. That sector accounted for more than 46 percent of total domestic sales for the month.
