February may be the shortest month, but it was a busy one for commodity resin pricing.
Regional prices for polyethylene, PVC, solid polystyrene and PET bottle resin all finished higher for the month, while polypropylene took a dive.
Prices for all grades of PE were up 4 cents per pound in February, with PVC up 3 cents and solid PS and PET bottle resin each up an average of 2 cents, according to market sources contacted by Plastics News. The PP dip averaged 6 cents per pound.
The price increases played out against a larger market picture of higher global oil prices and a weaker U.S. dollar, according to Phil Karig, managing director of Mathelin Bay Associates in St. Louis. Since early March 2017, Brent crude oil prices are up about 14 percent, while the dollar has depreciated about 15 percent vs. the euro.
“There are always other impacts on resin pricing such as capacity utilization and anticipated growth of the market locally and globally,” Karig said. “But crude oil prices are the backdrop against which other price influences in the resin market play out against over time.”
Looking forward, he added, depreciation of the dollar is likely to stall for a time as the U.S. Federal Reserve starts raising interest rates more aggressively, which should put a ceiling on crude oil price increases and decrease upward pressure on resin prices.
Longer-term, though, if U.S. budget deficits continue to expand, inflation-driven impacts of oil prices on resin prices “will begin to pick up speed,” Karig said.
The 4-cent PE hike came after lower demand had sent prices down 3 cents in January. Prices for all grades of high, low and linear low density PE had been flat in November and December.
The February PE increase “was supplier driven more than anything,” said Mike Burns, a market analyst with Resin Technology Inc. in Fort Worth, Texas. He added that higher raw material prices played a role in the move, as well some production issues and higher export sales.
Market analyst David Barry with PetroChem Wire in Houston sees the February PE increases as “a short-term move.”
“The cold snap in January had a larger impact on PE operating rates than people thought,” he said in an email to Plastics News. The market has seen a number of non-weather-related force majeure declarations as well, Barry added, at assets operated by at least five PE makers.
“All of these production events are winding down as we get into March, so it's likely to be a month for suppliers to play catch-up and to possibly get more active on the export front,” he said. “The new plants have had little impact on the domestic supply balance that I can see, so I would imagine that most of that new output is going offshore.”
U.S./Canadian PE sales got off to a mixed start in January, according to the American Chemistry Council. Regional sales of HDPE were up almost 4 percent, with LLDPE sales rising 7.5 percent. But sales of LDPE had a rough month, slipping almost 9 percent.
For HDPE, domestic sales growth of 4 percent was dampened slightly by 2.5 percent export growth. In LLDPE, exports boomed 33 percent in January — fueled by new capacity added in 2017 — boosting domestic sales growth of almost 1 percent. LDPE's 6 percent domestic sales drop in January was worsened by a 17 percent plunge in export sales.