Resin prices close the summer on a high note

September — as Earth, Wind & Fire once sang — was a time for dancing and not for cloudy days. Do you remember?

North American resin makers would use that description for September 2016, as they were able to raise prices for polyethylene, polypropylene, solid polystyrene and PET bottle resin.

Selling prices for PE in the region jumped by a nickel after being flat for four straight months. PE supplies have tightened as a result of several planned maintenance turnarounds and unplanned outages in the region. Companies that have had production issues for PE or ethylene feedstock at Gulf Coast locations in recent months include LyondellBasell Industries, ExxonMobil Chemical Co. and Westlake Chemical Corp.

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,” 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 Plastics News resin pricing chart.

The regional PP market continued its roller coaster ride through 2016, with prices climbing 6 cents per pound in September. 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. Regional PP prices now are up a net of 3.5 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.

For solid PS, a 3-cent September hike was the second straight upward move for the material. The market had seen a 2-cent hike in August. The September jump was tied into a 22-cent-per-gallon upswing in prices for benzene feedstock. Benzene prices for September closed at $2.51 per gallon — up almost 10 percent from the previous month.

Regional PS prices now are up a net of 6 cents per pound since Jan. 1. North American PS sales through August were down almost 1 percent compared to the same period in 2015, according to the ACC. Sales of the material into food packaging and food service — its largest end market — essentially were flat, while sales into the electrical/electronic end market grew 1 percent.

Over in PET bottle resin, prices ticked up an average of 1 cent per pound in September, after they had slipped down by that same amount in August. The move followed an increase in September contact prices for paraxylene feedstock, market sources said.

The 1-cent hike is the first increase seen by North American PET since a 2-cent jump took hold in April. Prices after that had been flat for three months before declining in August. Regional PET bottle resin prices now are up a net of 1 cent per pound so far in 2016.

At a recent industry conference, PET market analyst Tison Keel of IHS Chemical in Houston said that in a recent 52-week period, U.S. consumption of carbonated soft drinks — the biggest user of PET — fell almost 3 percent, while bottled water consumption surged by 8 percent. That's a good news/bad news scenario for PET makers, however, since water bottles use less PET per bottle than CSD bottles do.

PVC was the only major commodity resin not to see a North American price increase in September, as prices were flat for the fourth consecutive month. Prices for the material haven't moved since rising 2 cents per pound in June. One market contact told PN that PVC's flat pricing streak could end in October as a result of improving inventories and higher prices for ethylene feedstock.

PVC continues to be doing better than any other North American commodity resin in 2016, due in part to a rebound in the U.S. housing market. Through August, U.S./Canadian PVC sales were up almost 5 percent, with domestic sales growth of almost 5 percent augmented by a 5.4 percent surge in export sales. Sales of the material into its flagship rigid pipe and tubing sector were up 7.5 percent in that period.

The U.S. housing market is on track to record around 1.2 million housing starts this year, which would be up almost 10 percent from 2015. More than 60 percent of domestic PVC sales went into construction markets in the first eight months of 2016.