North American selling prices for polyethylene resins have jumped by a nickel per pound since Sept. 1, with polypropylene resin prices up 6 cents.
PE prices had been flat for four straight months before the September hike. Supplies of the material have tightened as a result of several planned maintenance turnarounds and unplanned outages in the region, market sources recently told Plastics News.
Companies that have had production issues for PE or ethylene feedstock — or both — at Gulf Coast locations in recent months include LyondellBasell Industries, ExxonMobil Chemical Co., Formosa Plastics Corp. USA and Westlake Chemical Corp., sources added.
“The 5 up seems to be pretty strong this month,” one major U.S. PE buyer said. “I would have thought we would have seen some [price decreases] over the summer, but I think there are fairly reasonable and legitimate reasons why that didn't happen.”
Lower PE inventories also played a role in the September hike, according to Mike Burns, PE market analyst at Resin Technology Inc. in Fort Worth, Texas. He added that, without further supply disruptions, regional PE prices likely are at their peak for the year.
“PE suppliers will desperately fight to keep any margin gains and might hold on to the [September] increase through December as they did last year, not considering downward pressure from the global price,” Burns said.
U.S./Canadian PE demand growth was mixed in the first eight months of 2016, according to the American Chemistry Council in Washington. Regional sales of high density PE were up more than 4 percent, while sales of linear low density PE grew more than 1 percent and those of LDPE declined by almost 1 percent.
Domestic HDPE sales growth of almost 2 percent was boosted by export sales growth of almost 15 percent in the eight-month period. For LLDPE, a domestic sales jump of more than 2 percent was lessened somewhat by a drop of almost 2 percent in the export market. The regional LDPE field saw domestic sales growth of 2 percent wiped out by a drop of almost 10 percent in export sales.
With the 5-cent September hike, regional PE prices now are up a net of 9 cents per pounds since Jan. 1, according to the PN resin pricing chart.
Polypropylene roller coaster
The regional PP market continued its roller coaster ride through 2016, with prices climbing 6 cents per pound in September. The 6-cent amount was expected by market watchers, even though price settlements for polymer-grade propylene (PGP) feedstock hadn't officially settled as of Sept. 27.
Regional PP prices had increased by 3.5 cents per pound in August. The combined August-September increase of 9.5 cents came after prices had declined for five consecutive months, lowering selling prices by a total of 10 cents per pound.
Tight supplies of PP resin allowed imported material from around the world to enter the North American market in the first part of 2016, which played a role in driving prices down. Market sources said that although import material remains available in the region, supplies of it have decreased, allowing PP prices to rise again. Taking into account prior increases and decreases, regional PE price now are up a net of 3 cents per pound since Jan. 1.
North American PP sales were up 1.3 percent in the first eight months of 2016, according to ACC. Domestic sales growth of 0.4 percent was helped out by an upsurge of almost 31 percent in export sales.
Domestic PP sales growth through August was led by the sheet market, where sales were up just over 5 percent, and injection molded rigid packaging, where sales bumped up 2.5 percent. The injection molded rigid packaging category includes cups, containers, caps and closures.