The June resin pricing picture offered a little something for everyone in the North American market.
Regional prices for polypropylene and solid polystyrene both fell, while PVC prices rose and prices for all grades of polyethylene and PET bottle resin treaded water.
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.
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, according to the American Chemistry Council. 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.
For solid PS, a 2-cent June drop continues a bumpy pattern which saw prices flat in May after increasing by 5 cents in April. The June slip 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).
While PP and solid PS were sliding down in June, regional PVC prices were heading in the other direction. Strong construction activity sent prices for that material up an average of 2 cents per pound in June.
That marked the third time in four months that regional PVC prices had 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 ACC. Domestic sales growth of almost 5 percent was boosted by a gain of almost 18 percent in export sales. Construction-related uses accounted for almost 64 percent of U.S./Canadian PVC sales for the five-month period.
Regional polyethylene prices were flat for the second consecutive month in June after rising an average of 4 cents per pound in April. PE prices stayed the same even though crude oil prices declined slightly from $49 per barrel to $48 during the month. Oil is a global price setter for PE, although natural gas is the most common PE feedstock in North America.
The April PE increase was the second consecutive monthly hike for the material. Prices had dropped in the first two months of 2016. A 5-cent January/February drop had been canceled out by a 5-cent gain in March.
U.S./Canadian PE sales fared well in the first five months of 2016. Sales of high density PE surged almost 5 percent, with flat domestic sales magnified by gains of 26 percent in export sales. Linear low density PE sales were up just over 1 percent for the quarter with domestic and export sales both growing around 1 percent. Low density PE managed five-month growth of 2 percent, as a domestic sales gain of 2.5 percent was softened by flat export sales.
North American PET bottle resin prices also were flat for a second straight month in June. Prices for the material had ticked up 2 cents per pound in April, with warmer weather improving seasonal demand for bottled water and carbonated soft drinks. The April move was the second straight monthly PET price hike, following a similar 2-cent move in March.