September provided a bit of calm for North American commodity resin pricing, with only polyethylene and polypropylene prices moving.
Prices for all grades of high, low and linear low density PE in the regions were up an average of 3 cents per pound in October. Drone attacks on Saudi Arabian oil assets in the Middle East on Sept. 14 didn't have as much of an impact on resin markets as expected, but heavy rains that hit the Houston area on Sept. 18 and 19 were enough to push the 3-cent hike through, sources said.
The rains affected some Houston-area plants operated by ExxonMobil Corp. and LyondellBasell Industries. Although no producer declared force majeure, concerns about supply were enough to push the increase through.
The Sept. 14 drone attacks initially were expected to have a major impact on oil supplies and downstream petrochemicals, but Saudi Aramco — the oil supplier targeted — said it would have most affected capacity up and running by the end of the month. U.S.-based shale oil and gas have also reduced the impact of Middle Eastern supplies on world markets.
The 3-cent PE hike for September "was event-related, not related to feedstocks, inventory, production or anything else," said Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas.
Earlier in September, Burns added, Asian PE prices were at 10-year lows, preventing North American PE from being exported there and filling warehouses in Houston with unsold PE. But demand picked up as a result of some prebuying in August and then because of the Houston weather issues, sending prices up for both domestic and export markets.
The September hike comes after regional PE buyers weathered a confusing summer in which prices fell a total of 6 cents per pound between June and August. Reasons for the decline varied from buyer to buyer, but many said increased supplies of PE in recent years played a role.
PE makers now have announced 8-cent increases for Oct. 1, but market watchers said those moves were made when the impact of the Saudi attacks was expected to be much greater. As a result, the October hike isn't likely to go through at the full amount if it goes through at all, buyers said.
The North American PP market in September saw prices bump up 1 cent per pound, following a similar increase in price for propylene monomer feedstock. Regional prices had been flat in August after moving up 1 cent in July.
Prices for PP had been down 4 cents in June, canceling out a 4-cent price hike from May. Prior to those moves, a series of declines from November through March had sent PP prices tumbling 24.5 cents.