Changes on the way for North American resin prices

Late-year price declines have affected commodity resins, with North American prices for polyethylene, polypropylene, suspension PVC and solid polystyrene all down since Nov. 1.

For each of those materials, market watchers cited weaker demand and full supplies as reasons for the price drops.

Prices for all grades of PE are down an average of 3 cents per pound for the month. Prices had been flat in October after sliding down 3 cents in September. PE makers had announced 8-cent increases for Oct. 1, but those moves were made when the impact of an attack on Saudi Arabian oilfields was expected to be much greater for plastics.

Domestic spot prices for PE "are getting better aligned with international prices," market analyst Esteban Sagel said in an email. He added that lower spot prices "will continue to pressure contract prices down," although low prices for ethane feedstock "will soften the pain" for PE makers. Sagel is principal of the Chemical & Polymer Market Consultants consulting firm in Houston.

North American prices for PP also fell an average of 3 cents per pound in November, owing to lower prices for propylene feedstock and soft demand. Prices had also fallen 2 cents in October.

Market watchers told Plastics News that North American PP sales are up less than 2 percent so far in 2019. Factoring out exports leaves domestic demand slightly negative for the year.

The North American PP market had relatively high operating rates and a tight supply/demand balance from 2015-18, according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas, but now the market "is in transition."

"We're going into a new phase of the market cycle," he added. "This is a fun time to be a PP buyer."

On the PP capacity front, Braskem is adding a little more than 1 billion pounds of annual production in La Porte, Texas, in the second quarter of 2020. Company officials have said the primary target of PP made by the new line is the U.S. market, although it will also support the firm's efforts in Brazil and Europe.

Regional suspension PVC prices are down an average of 1 cent since Nov. 1 after being flat for the previous two months. Prices for the material had been down 1 cent in August.

The PVC price drop is somewhat surprising, since the U.S. housing market recorded three of its strongest months of the year in August, September and October, according to the U.S. Census Bureau. The October annual rate of 1.3 million residential units was more than 8 percent higher than the rate for the same month in 2018. Construction activity accounts for around 60 percent of North American PVC demand, with most of that amount coming from the pipe market.

North American solid PS prices have fallen an average of 3 cents per pound in November after being flat for the previous three months. The decline was fueled in part by a drop of 14 percent in prices for benzene feedstock, which is used to make styrene monomer. Benzene prices for November settled at $2.23 per gallon.

Domestic PS sales are expected to be flat to slightly down in 2019, sources said, with supplies readily available. Some PS sales gains have been reported for consumer products and electrical/electronic applications