North American polypropylene resin buyers have been hit with a big price hike to kick off 2018, while buyers of polyethylene resin have seen a bit of pricing relief.
Average selling prices for PP in the region jumped 9 cents per pound in January, mainly resulting from tightness in propylene monomer feedstock and, in some cases, for PP resin itself. The average PE price decrease for January was 3 cents per pound, due in part to lower demand.
North American PP prices now have increased for seven consecutive months, with those increases totaling 19.5 cents per pound. Higher domestic demand combined with feedstock and resin shortages from Hurricane Harvey have played a role in these price hikes.
The January price hike was tied to unseasonably cold weather in the Houston area, where large amounts of capacity for PP resin and feedstock are located. A PP line operated by Braskem Americas in La Porte, Texas, had an unplanned shutdown on Jan. 17 because of a frozen boiler transmitter.
Another PP line operated by LyondellBasell Industries in Bayport, Texas, also was down on that same date because of a power issue. Minor production issues were reported at ethylene or propylene units operated in the region by Flint Hills Resources, Huntsman Corp., Chevron Phillips Chemical Co. and Enterprise Products.
DowDuPont Inc. also reported a process unit upset at its massive 2.3 billion pound capacity ethylene/propylene unit in Freeport, Texas. Temperatures dipped into the 20s, creating icy conditions and leading to some power outages. The cold snap marked the first time that Houston had seen temperatures in the 20s in January since 1996.
The 9-cent increase "almost entirely was cost push," according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas. "It was all driven by polymer-grade propylene. There was no [profit] margin expansion."
Improved operating conditions could lead to some of the 9 cents coming off in February, he added.
A major PP buyer on the U.S. East Coast said that supplies were tight and that his injection molding firm was "having a hard time" in sourcing rail cars of resin. The firm has been able to meet its needs, he said, but now faces a challenge in passing the increase on to its own customers.
North American PP sales essentially were flat in 2017, with domestic growth of almost 3 percent negated by a drop of more than 50 percent in export sales, according to the American Chemistry Council.
The 3-cent PE price drop for January came after prices for those materials had been flat in November and December. Prior to that two-month period, prices had climbed a total of 7 cents per pound between May and October.
January's 3-cent decline was tied into lower demand and came after there was some confusion between actual market price declines and non-market adjustments received by some buyers, according to RTI market analyst Mike Burns.
U.S./Canadian PE sales were mixed in 2017. Sales of high density and low density PE both were down for the year. HDPE in the region saw sales slump almost 4 percent, as domestic sales growth of almost 4 percent was overcome by a drop of almost 28 percent in exports.
For LDPE, sales dipped almost 1 percent, but for opposite reasons than HDPE. Domestic sales of LDPE slipped more than 2 percent, but the overall loss was softened by a gain of more than 4 percent in export sales.
The U.S./Canadian LLDPE market fared better in 2017, with sales growth of more than 1 percent. Domestic sales growth of almost 4 percent was weakened by a drop of more than 6 percent in exports.
North American PE makers now are seeking price increases of 4 cents per pound effective Feb. 1.
