Higher regional demand drove up North American prices for most commodity resins in March.
Materials with prices on the rise included polyethylene, polypropylene, suspension PVC and PET bottle resin. In engineering resins, North American nylon 6 and 6/6 prices have declined since the start of the year. And in the recycled resins markets, high density PE prices are up in the last six months, while prices for recycled PP have dropped.
PE prices surged an average of 5 cents per pound, canceling out price drops totaling that same amount that had hit the market in January and February. U.S./Canadian sales of high density PE were up almost 10 percent in the first two months of the year, according to the American Chemistry Council in Washington.
Domestic HDPE sales were up only 1.3 percent, but export sales skyrocketed 48 percent for the two-month period. In the U.S./Canadian linear low density PE market, two-month sales grew 7 percent, with domestic growth of 3.5 percent boosted by a 20 percent uptick in exports.
West Texas Intermediate crude oil prices began March around $36 per barrel, but soon approached $42. Per-barrel prices then fell to $37 by the end of the month, but again had rallied to $41.50 in late trading April 13. Crude oil prices are used as an international price-setter for PE, even though most PE made in North America is based on natural gas.
On the supply side, the Braskem Idesa joint venture has opened a major new PE plant in Mexico. Some of that plant's output will be shipped to the U.S.
Regional PP prices ticked up an average of 1 cent per pound in March, although some buyers saw different outcomes. Prices had been flat in February after experiencing four consecutive price increases from October through January. Those increases had totaled 10 cents per pound.
“March pricing continues to be negotiated with varying outcomes,” Resin Technology Inc. market analyst Scott Newell said in an email. “Imports are here and are grabbing market share. This has created competitive situations in which many PP producers are responding with lower prices.
North American PP sales grew almost 3 percent in the first two months of 2016. Domestic sales growth of just over 4 percent was lessened by a 53 percent drop in export sales.
The regional suspension PVC market saw prices jump an average of 4 cents per pound in March, as several planned and unplanned production outages caused resin supplies to become tight.
“Weather has been improving, which usually helps PVC demand in construction, but there's been limited volume [of resin] available because of the outages,” an industry source said.
Regional PVC prices had been flat in February after dropping an average of 1 cent per pound in January. Major PVC suppliers now have announced an additional increase of 3 cents per pound effective April 1.
U.S./Canadian PVC sales grew more than 9 percent in the first two months of the year, with export sales growth of almost 28 percent improving a modest 2 percent domestic growth rate.
The biggest March turnaround came in the PET bottle resin market, where North American prices rose after months of decline. The 2-cent-per-pound PET hike ends a streak in which prices for the material had slipped for six consecutive months before being flat in February. Prices had fallen a total of 13 cents per pound during that six-month skid.
The North American PET market continues to struggle with overcapacity, but warmer spring weather typically increases demand for both carbonated soft drinks and bottled water — PET's two main end markets.
Higher feedstock prices also played a role in the PET increase, according to a recent report from the PetroChem Wire consulting firm. U.S. PET producers adjusted invoicing to match rising crude oil prices and their effect on PET production, the report said.
Polystyrene was the only commodity resin to see no North American price movement in March. Benzene feedstock prices fell almost 4 percent to $1.77 per gallon, but that wasn't enough of a decline to move the needle on PS resin prices. Regional PS prices had fallen an average of 2 cents per pound in February, ending a streak of four consecutive months in which prices for the material had been flat.
North American PS sales were flat in the first two months of 2016. Strong PS demand growth, however, was reported in the electrical/electronic end market, where two-month sales jumped almost 12 percent.
The 8-cent-per-pound nylon price drop seen since January resulted mainly from lower feedstock costs. Demand for nylon remains solid, especially from the automotive sector.
“Prices are catching up to lower feedstock costs,” said Paul Blanchard, a market analyst with IHS Chemical in Houston. “For nylon, supply is a bit long so there's also some competitive pressure on base resin prices.”
In the North American recycled resins market, strong demand for recycled HDPE has lifted prices in the last six months. Prices for natural, post-consumer HDPE pellets and flake are up an average of 10 cents per pound in that period. Prices for mixed-color grades of both post-consumer and post-industrial HDPE pellets and flake are up 5 cents in that span as well.
For recycled PP, however, prices have softened by an average of 5 cents per pound in that six-month stretch. Tight supplies of prime PP in the region have not helped recycled PP demand, a recycling executive in the Midwest told Plastics News. That's because PP demand growth has been in food-contact applications, where recycled PP often cannot be used, he said.
