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May 02, 2019 02:00 AM

North American PE price hike sticks in April

Frank Esposito
Senior Staff Reporter
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    Jessica Jordan

    After considerable effort, North American polyethylene makers were able to push through a 3-cent-per-pound price increase in April.

    Buyers had resisted the increase before it took hold late in the month, market sources told Plastics News.

    Regional prices for all PE grades had been flat for the first three months of 2019, as buyers were able to ward off a 6-cent hike that major PE makers first announced for Jan. 1. Market watchers at one point thought that 3 of the 6 cents would hold in February, but market fundamentals did not support that move.

    PE prices had slid 3 cents in both November and December. Market watchers cited lower oil prices and lower global demand, especially from packaging. Oil prices affect global resin markets, even though most North American PE is made from natural gas.

    West Texas Intermediate crude oil prices began 2019 around $48 per barrel but were near $61.50 in early trading May 2 for an increase of more than 28 percent.

    The challenge facing the global PE market is an overly abundant supply of material, according to Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas.

    "Oil prices are at a six-month high, but ethylene [feedstock] prices are at a four-month low," Burns said May 2. "The bottom line is there's too much resin right now."

    Global PE demand "is very good, but [PE] resin prices have been lower than expected because of new supply," he added.

    Many North American PE makers have added capacity in recent years to capitalize on newfound supplies of natural gas in the region. Much of this new supply has been tagged for export markets, although domestic PE demand has remained solid.

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