The first shock waves from Hurricane Harvey impacted North American commodity resin prices in September.
The storm brought high winds, heavy rains and flooding to the Texas coast beginning on Aug. 25. Those conditions led to supply shutdowns for many commodity resins. Later difficulties in sourcing raw materials needed to make resins caused force majeure sales limits to be enforced.
North American polyethylene prices moved up an average of 4 cents per pound in September, with polypropylene prices increasing 7 cents, solid polystyrene prices ticking up 3 cents and PET bottle resin prices up an average of 4 cents, according to market sources contacted recently by Plastics News.
The PE pricing situation has been complicated by a series of increases released for different dates by different suppliers. DowDuPont Inc. and LyondellBasell Industries had a Sept. 1 enforcement date for the 4 cents, while several others had Sept. 15 and a few opted for Oct. 1, with no announced date in September.
Most market sources contacted by Plastics News indicated that PE buyers who didn't see the 4-cent increase in September likely would see it by Oct. 15. As a result, Plastics News is showing the 4-cent increase.
Nova Chemicals and several other PE makers now have announced additional 3-cent increases for Oct. 15. Market sources said that move has a good chance of being successful since some suppliers continue to operate under force majeure sales limits. Spot prices for PE had jumped 10 cents or more in the immediate aftermath of the storm.
One resin supplier said Harvey and Hurricane Irma, which hit Florida on Sept. 8, has caused "a nationwide shortage of available truck-load and bulk-truck capacity." Road freight demand is returning to Houston, according to the IHS Markit consulting firm, as immediate emergency relief gives way to longer-term rebuilding needs.
Storm-related PE supply issues also had helped a 3-cent August increase take hold, after it initially was thought to be unsuccessful. Prior to that August hike, regional PE prices had been flat for two consecutive months.
U.S./Canadian PE sales were mixed in the first eight months of 2017, according to the American Chemistry Council. Sales of high density PE were down more than 4 percent, as a domestic sales gain of almost 3 percent was wiped out by a drop of 27 percent in exports.
Low density PE sales ticked up almost 2 percent in those eight months, with a domestic sales drop of more than 1 percent negated by an export sales gain of more than 12 percent. In linear low density PE, regional sales grew almost 1 percent, as domestic growth of 3 percent was lowered by an almost 8 percent drop in exports.
The 7-cent PP increase for September mainly was the result of higher prices for polymer-grade propylene feedstock, which has been in short supply because of storm-related production issues. Prices had gone up 0.5 cents in both July and August after being flat in June.
At a recent meeting of the Western Plastics Association, PCW market manager Samantha Hartke said that additional PP price hikes could be on the way. The storm and other factors created a "more acute shortage" on the PP side than the PE side. The factors include a lack of pending PP capacity expansions.
North American PP sales were not robust in the first eight months of 2017, increasing less than 1 percent vs. the same period in 2016. Domestic sales grew almost 2 percent, while exports slipped 27 percent.
Regional PS prices moved up 3 cents in September after being flat in August and tumbling 4 cents in July. Some production of benzene, which is used to make styrene monomer, has been affected by Harvey. PS maker Americas Styrenics has announced a 3-cent increase attempt for Oct. 1.
North American PS sales fell almost 1 percent in the first seven months of 2017. A domestic sales loss of more than 1 percent was softened a bit by a boost of 17 percent in exports.
For PET bottle resin, North American prices moved up an average of 4 cents per pound in September, as markets worked to recover from the storm. Price increases ranging from 2.5 cents to 6.5 cents were reported for the month.
Although no PET resin production is on the Texas coast where Harvey hit, supplies of paraxylene and MEG feedstock there were limited, causing a crunch in PET production.
Prices for PET also moved up 2.5 cents in August and now have increased for four consecutive months.
Other factors have impacted the North American PET field in recent weeks. In mid-September, Mexican conglomerate Alpek announced that it was stopping shipments of a PET feedstock to two plants operated by M&G Group in Mexico and Brazil because of unpaid debts.
M&G Group's Project Jumbo PET site in Corpus Christi, Texas, was expected to add more than 2 billion pounds of capacity to the market later this year, but that project now faces uncertainty as well. Numerous contractors working at the site have said that they have not been paid by M&G.
An M&G spokesman told Plastics News that there was no update on the status of the Corpus Christi project.
PVC prices in the region were unchanged in September, but market sources said there's a good chance that a 5-cent hike will take hold in October. PVC maker Formosa Plastics Corp. USA has resumed PVC production in Point Comfort, Texas, a spokesman said, but continues to operate under force majeure for sales of the material.
U.S./Canadian PVC sales eked out growth of 1.2 percent in the first eight months of 2017. Domestic sales growth of just over 3 percent was weakened by an export sales loss of just under 3 percent.