A chaotic month of North American resin pricing ended with 3-cent per-pound reductions for most grades of low and linear low density polyethylene and for film and other flexible grades of high density PE.
The drops ended a stretch in which prices for all grades of HDPE and LDPE had been flat for four consecutive months. LLDPE prices had been flat for two straight months after sliding 3 cents in May.
There were exceptions to the 3-cent decreases in some applications. Some buyers reported no price drops for injection molding and rotational molding grades of LLDPE. Some grades of HDPE used in medium molecular-weight film also didn't see the decrease.
No price drops for August on injection molding and rotational molding LLDPE and on MMW film HDPE are being shown on this week's Plastics News resin pricing chart. Decreases on those materials could be shown at a later date pending the outcome of negotiations.
Market analyst Mike Burns said that the August drops were supplier-driven.
“July had one of the highest PE production months of all time,” added Burns, who is with Resin Technology Inc. in Fort Worth, Texas. “Demand is good for all [PE] resins, but supply is outpacing demand.”
“All of the Hurricane Harvey hiccups [from 2017] have been resolved and new capacity is beginning to show. Exports were very high in July and inventories grew, which is not a good thing for producers.”
Other market sources said that U.S. PE exports were down in August, especially for material being shipped from the Houston Ship Channel. Massive PE capacity expansions are hitting the market as a result of abundant North American supplies of shale gas feedstock.
In 2017, more than 7 billion pounds of PE capacity was added in North America through projects from DowDuPont, ExxonMobil, Chevon Phillips and Ineos Sasol. Around 3 billion more pounds from DowDuPont, Sasol and Formosa Plastics is set to be added by the end of 2018. For 2019, another 2 billion pounds is expected from Sasol and LyondellBasell.
Although domestic market demand growth has been solid, a good portion of this capacity had been earmarked for foreign markets. That situation became complicated in August when China retaliated against U.S. tariffs on a wide range of Chinese products by placing tariffs on many U.S.-made grades of PE.