North American prices for polyethylene, polypropylene and PET bottle resin hit the ground running in 2018.
Prices for PP and PET both moved up in January, while PE prices ticked down an average of 3 cents per pound. The PP hike totaled 9 cents, while the upward move for PET was 3 cents.
The PP surge mainly resulted from tightness in propylene monomer feedstock and, in some cases, for PP resin itself. 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 unusually 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.
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.