Ending 2016 with PP and PE price drops

The end of 2016 came with more North American price drops for polyethylene and polypropylene and a surprising price hike for PET bottle resin.

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.

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.

The PE price drop ran counter to changes in price for crude oil, which affect PE pricing on a macro level. West Texas Intermediate crude prices began December around $52 per barrel, but were near $52.50 by the end of the month.

Regional PP prices slumped an average of 4 cents per pound for December, 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.

Through November, North American PP sales essentially were flat vs. the same period in 2015, according to ACC. 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 increases in PET are 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.

Regional prices for solid polystyrene and for PVC resins were flat in December. PS prices were unmoved in spite of higher prices for benzene feedstock. Market watchers as a result expect PS prices to increase in January.

PS prices in the region had fallen 2 cents per pound in November after being flat in October. Prices had climbed a total of 5 cents in August-September.

North American PS sales through November were down 0.5 percent compared to the same period in 2015, according to ACC. Domestic PS demand growth was led by food packaging and food service — its largest end market — where 10-month sales were up almost 1 percent to more than 2.5 billion pounds.

Regional PVC prices were flat in December, as colder weather slowed construction activity. PVC makers in November gave back a 2 cent increase they had won in October. Lower ethylene feedstock prices played a role in that move. Prior to that October increase, PVC prices had been flat for four consecutive months.

Through November, U.S./Canadian PVC sales were up 5 percent, according to ACC. PVC's flagship rigid pipe and tubing segment also was its largest domestic growth market for the 11 months, surging more than 6 percent to more than 4.4 billion pounds.

Net price changes for full-year 2016 showed North American PVC prices up an average of 7 cents per pound and PS up 4 cents per pound.