Commodity resins have a December to remember

North American commodity resin markets didn't exactly have a relaxing holiday season, as prices for three major materials increased and one declined.

And a material that didn't see prices move at all — polyethylene — was surrounded by plenty of pricing drama anyway.

Regional prices for polypropylene and PET bottle resin each ticked up a penny per pound in December, while solid polystyrene prices saw a 5 cent jump and PVC prices slipped by 1 cent. It was the third consecutive 1 cent hike for PP, which also had seen a 7 cent spike in September as the market reacted to temporary shortages caused by Hurricane Harvey.

All of the cost push for higher PP prices is coming from polymer-grade propylene feedstock, according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas. PGP supplies have been impacted by the temporary shutdown of a DowDuPont Inc. unit and the delayed start of an Enterprise Petrochemicals unit, both in Texas.

As a result of this tightness, PP price hikes of at least 5 cents per pound could hit the North American market in January, Newell added.

North American PP sales grew just over 1 percent in the first 11 months of 2017, according to the American Chemistry Council. Domestic sales grew 3 percent in that period but were softened by a 40 percent plunge in exports.

The 1-cent PVC drop followed flat pricing in November and marked the first regional price decline since November 2016. PVC prices had moved up 3 cents in October after six straight months of flat pricing.

PVC demand has benefited from a strong U.S. construction market. U.S./Canadian PVC sales managed growth of 3 percent in the first 11 months of 2017. Domestic sales growth of 5 percent was weakened by an export sales loss of more than 1 percent.

The 1-cent PET hike came amid market chaos tied into the bankruptcy of M&G Polymers and feedstock constraints after Hurricane Harvey. PET prices now have increased for seven straight months, with most customers seeing an 8 cents in increases since September.

M&G recently restarted a 1.2 billion-pound capacity PET plant in Altamira, Mexico, but its 800-million-pound capacity plant in Apple Grove, W.Va., remains down. M&G is trying to sell the Apple Grove unit, as well as a massive unfinished PET project in Corpus Christi, Texas.

The result of these closings has been tighter PET supplies. Imports might help North American processors in the short term, but regional suppliers have asked the U.S. government to place duties on PET imports from Brazil, Indonesia, South Korea, Pakistan and Taiwan. A decision is expected by early March.

Regional PS prices had been flat in November, but jumped 5 cents in December, following increases for benzene feedstock. Benzene prices in December surged 46 cents to $3.30 per gallon, a one-month jump of 16 percent.

Prior to November, PS prices had increased by 3 cents in both September and October, meaning prices surged 10 cents per pound in the final four months of 2017.

North American PS sales fell almost 1 percent in the first 11 months of the year. A domestic sales loss of more than 1 percent was softened by a gain of almost 12 percent in exports.

The North American PE market in December was thrown into a state of confusion as some buyers received lower prices, while many others negotiated year-end price reductions that weren't reflective of pricing caused by standard factors such as supply/demand and feedstock pricing.

"Although there could be deals in the secondary markets, our experience is that the prime branded market was unexpectedly flat in December," an executive with a resin distribution firm told Plastics News. He added that although many of his firm's customers are seeking "pre-Harvey prices," fundamentals might not support such a large correction. An executive at another resin distribution firm said PE prices for his customers were flat in December as well.

RTI market analyst Mike Burns said that PE suppliers "are not conceding a December market-wide price reduction." David Barry, a market analyst with PetroChem Wire in Houston, agreed that part of the December PE market problem is that PE makers gave 3 cent discounts as non-market adjustments, meaning they were not likely to add another 3 cents to that as a true market move.

An executive at a major PE packaging firm told PN that "there may have been a few non-market reductions that others are trying to turn into a market wide decrease of 3 [cents per pound]." PE suppliers "are flat for December and dug in very firm," added an executive at a major PE film supplier.

Although some regional PE buyers may have seen actual downward market moves for December, PN is showing the overall market as flat for the month. The PN pricing chart likely will show a non-market price adjustment early in 2018, based on price concessions given in late 2017 and in previous years as well.

Prior to December, regional PE prices had been flat in November after increasing a total of 10 cents per pound from August to October, largely as a result of supply tightness from Hurricane Harvey. Looking ahead, PE market leaders DowDuPont and ExxonMobil Chemical have announced attempts to raise prices by 4 cents per pound effective Feb. 1.

U.S./Canadian PE sales were mixed in the first 11 months of 2017. Sales of high density PE were down almost 4 percent as a domestic sales gain of almost 4 percent was wiped out by a drop of almost 28 percent in exports.

Low density PE sales ticked up more than 1 percent in those 11 months, with a domestic sales drop of more than 1 percent negated by an export sales gain of 9 percent. In linear LDPE, regional sales were up almost 2 percent as domestic growth of more than 4 percent was lowered by a 7 percent drop in exports.