North American polyethylene and polypropylene resin prices dropped once again in December, while regional prices for PET bottle resin continued their surprising upward trend.
Regional prices for all grades of high, low and linear low density PE fell an average of 2 cents per pound in December. Softer demand played a role in the decline, as did momentum from a 3-cent drop that hit the market in November.
Prior to the two year-end price declines, regional PE prices had been flat in five of the previous six months. The only price movement for the market came in September, when prices jumped 5 cents per pound on short-term inventory tightness.
The 2016 North American PE market “was very well supplied … with production outstripping domestic demand,” said market analyst Alkarim Shamsy of materials supplier CANEI Corp. in Toronto. He added that large amounts of new PE capacity scheduled for 2017 “would put downward pressure on PE prices.”
U.S./Canadian PE demand growth was mixed in the first 11 months of 2016, according to the American Chemistry Council. Regional sales of HDPE were up more than 2 percent, while sales of LLDPE essentially were flat and those of LDPE declined more than 2 percent.
Domestic HDPE sales growth of more than 1 percent was boosted by a gain of more than 5 percent in export sales for the 11-month period. The LDPE market saw domestic sales growth of almost 2 percent wiped out by a plunge of more than 14 percent in export sales. In LLDPE, Domestic sales growth of almost 1 percent was balanced out by an export sales drop of more than 1 percent.
PP prices slumped an average of 4 cents per pound for the month, as a result of lower demand, lower feedstock costs and ample supplies of propylene monomer. It was the third consecutive month that PP prices fell in the region, following drops totaling 7.5 cents in October-November.
The 11.5 cents in combined PP price declines for the final three months of 2016 followed total increases of 9.5 cents per pound in August-September. PP pricing was the most volatile of any North American commodity resin once again in 2016.
“PP prices were on the downturn for the last couple of months,” Shamsy said. “However, it seems that at the end of December, market sentiment shifted upward, at least on the spot market.”
“As domestic [PP] producers reduced operating rates and intensified exports, supply started to decrease,” he added. “Now, the market is much closer to balanced.”
Through November, North American PP sales essentially were flat vs. the same period in 2015, according to the American Chemistry Council in Washington. A drop of almost 2 percent in domestic sales was negated by a jump of almost 74 percent for sales into the export market.
Regional sales of PP into the sheet market grew more than 3 percent in the first 11 months of 2016, but sales of the material into injection molded housewares slumped more than 8 percent and fell almost 11 percent into oriented film.
PET continued its surprising pricing run in late 2016, with prices moving up an average of 2 cents per pound in December. That marked the fourth consecutive monthly price hike for the material, following identical increases of 1 cent per pound in the previous three months.
The moves were tied into higher feedstock costs. Late-year price movement in PET is uncommon, since demand for the material is tied into carbonated soft drinks and bottled water, which post higher sales in warm summer months.
For the year, North American PE prices finished up a net of 4 cents per pound, with regional PET prices up a net of 5 cents. Regional PP prices went in the other direction, finishing the year down a net of 8 cents per pound.