It's not just polypropylene prices that are on the rise this year. Prices for solid polystyrene also climbed an average of 5 cents per pound in January, and prices for nylon 6 and 6/6 resins are under upward pricing pressure as well.
The 10-cent PP hike is a sharp reversal from a combined 11.5 cents in price drops that market had seen in the last three months of 2016. The January hike was the result of tight supplies of polymer-grade propylene feedstock.
The PetroChem Wire consulting firm in Houston said that propylene prices in December did not reflect a tight market, because the situation was masked by year-end destocking. When demand resurfaced in January, propylene buyers found they had to pay dramatically higher prices.
PetroChem Wire added that the run-up in propylene costs caught PP buyers off guard and caused some to lower their order volumes for January.
The 5-cent PS hike for January wasn't completely unexpected, as prices for benzene feedstock had climbed for two straight months. North American benzene prices shot up 33 cents to $2.67 per gallon. Prices for that material also had increased 11 cents in December, but the market couldn't settle on an increase amount for PS resin.
As a result, regional PS prices were flat in December. PS prices in the region had fallen 2 cents per pound in November after being flat in October. Several factors have caused benzene prices to move up by almost 20 percent in the last two months, according to Robin Chesshier, a market analyst with RTI.
Those reasons include tight supplies, lack of imports, stronger demand, pull from higher prices in other regions and a move from oil-based naphtha back to natural gas-based ethane as a precursor. Ethane produces less benzene per unit than naphtha does.
PS maker Americas Styrenics LLC now is seeking an increase of 8 cents per pound effective Feb. 1. North American PS sales for full-year 2016 essentially were flat at just under 4.4 billion pounds, according to ACC. But the largest end market — food packaging and food service — saw sales growth of 1.3 percent, to more than 2.7 billion pounds.