Strong construction activity sent North American PVC resin prices up in June, while imports sent regional polypropylene prices down.
Regional prices for solid polystyrene resin also slipped in June, resulting from a combination of lower demand and falling feedstock prices.
June PVC prices ticked up an average of 2 cents per pound, marking the third time in four months that prices for that material have increased. Prices had been flat in May after climbing a total of 6 cents per pound in March and April.
An improving housing market has boosted U.S./Canadian PVC demand and paved the way for these price hikes. U.S. housing starts in May were at an annual rate of 1.16 million units. That's up more than 9 percent vs. the same month in 2015.
The U.S. housing market continues to recover from the recession of 2008-09. Housing starts peaked at more than 2 million per year before the recession, but plummeted to around 500,000 when the market collapsed. The market bounced back above 1 million starts by 2014 and continued to grow almost 11 percent in 2015 to reach 1.112 million units.
Through May, U.S./Canadian PVC sales were up 8.6 percent, according to the American Chemistry Council. Domestic sales growth of almost 5 percent was boosted by a gain of almost 18 percent in export sales.
PVC's flagship rigid pipe and tubing end market saw sales growth of 7 percent in the first five months of 2016. Sales of PVC into extruded windows and doors soared more than 17 percent and sales into fencing and decking mushroomed by more than 28 percent in the same comparison.
Construction-related uses accounted for almost 64 percent of U.S./Canadian PVC sales for the five-month period.
PP continues slide
Regional PP prices continued their slide in June, dropping another 4 cents per pound on average. Some buyers saw drops of 3 cents for the month, with others experiencing a 5-cent reduction. These amounts were in combination with the amount of decrease they had seen in previous months.
The June move is the fourth straight monthly decline seen by PP. Prices for the material had slid a total of 5 cents in March-April-May, with buyers seeing different amounts at different times. Growing supplies of PP imported from outside of North America have caused regional suppliers to drop their prices to meet competitive situations.
PP makers ExxonMobil Chemical Co. of Houston and Formosa Plastics Corp. USA of Livingston, N.J., had pre-announced PP price decreases for June in late May.
Import materials have found a home in North America as the region's PP production has struggled to keep up with demand. This is partly the result of large amounts of PP production capacity being eliminated when demand fell during the recession. Operating rates for North American PP plants now are in the high 90s.
North American PP demand growth has been moderate in the first five months of 2016. Overall sales were up only 0.5 percent, as domestic growth of 1.5 percent was weakened by a 32 percent drop in export sales.
High regional prices have decimated exports of PP from North America in recent years. As a result, exports accounted for barely 2 percent of total 2016 sales through May.
For solid PS, the 2-cent June drop continues a bumpy pattern which saw prices flat in May after increasing by 5 cents in April. The June drop was connected to a 4 percent price decline for benzene feedstock, which is used to make styrene monomer. Benzene prices had seen a similar 4 percent drop in May, but PS makers were able to keep prices flat.
On the demand front, solid PS struggled a bit in the first five months of 2016, with sales falling 1.3 percent. Much of the sales decline came from reduced sales to resellers/compounders (down 10 percent) and into the consumer/institutional end market (down 7 percent).
Solid PS sales markets showing gains in North America through May included food packaging/food service (up almost 2 percent) and electrical/electronic (up 5 percent).