Days of higher prices in May for resin buyers

April showers didn't bring much relief for North American resin buyers in May, as prices increased for most commodity resins.

Suppliers of most commodity materials remain challenged by demand trying to catch up with supply disruptions that began early last year. Some materials also still remain on force majeure sales allocation.

Regional prices for all grades of PE rose by an average of 5 cents per pound for May, according to buyers and market watchers contacted by Plastics News. Prices for high density PE had been up 7 cents in April, with prices for low and linear low density PE up 9 cents.

Supplies of the material remain tight as producers look to recover from outages caused by Winter Storm Uri in February. LDPE and LLDPE prices now are up a total of 33 cents so far in 2021 and are up 53 cents since January 2020. HDPE prices are up 31 cents and 51 cents in the same comparisons. The May price hike marked the sixth consecutive month that prices in the region were up.

PE production in May was affected by operating issues at plants operated by Dow Inc., Braskem America and Nova Chemicals, according to industry sources. In a recent interview with Plastics News, market veteran Robert Bauman said that the PE market essentially lost 30-40 days of production after the ice storm and that buyers "are still scrambling for resin."

"The [PE] market essentially needs a billion pounds back," said Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas. "Producers need to have 90 days without a disruption, but that hasn't happened yet."

On a recent webinar, Brian Pruett, senior vice president with the Chemical Data Inc. unit of research firm ICIS of Houston, said the PE market might see one or two additional increases this year before the market potentially enters into a price correction.

North American PE makers now are seeking increases ranging from 5-7 cents per pound for June.

Regional PP prices ended a two-month slide in May by surging upward by 13 cents per pound for the month, matching a similar increase in price for polymer-grade propylene feedstock. PP prices had fallen a total of 19.5 cents in March and April, as resin units consumed less PGP while recovering from the effects of the winter storm that hit Texas in February.

PP makers had attempted to add 5 cents in margin improvement onto the 13-cent May hike, but were unsuccessful, as the move wasn't supported by all producers, market sources told Plastics News. Producers had gained 12 cents in margin in March/April, as the 19.5-cent PP drop was less than the 31.5-cent drop seen by PGP.

Prior to these moves, regional PP prices had soared an incredible 61 cents in the three-month December-February period because of tight supplies of both resin and PGP.

Regional PP demand remains strong, although the market continues to work out supply issues, according to market veteran Craig Blizzard, vice president of Blizzard Consulting Group LLC in West Chester, Pa.

Blizzard estimated that the current PP supply/demand crunch "will take the rest of the year to sort out." He added that his firm's PP customers "are reassessing a myriad of supply chain issues and are reassessing their supplier portfolio."

On the ICIS webinar, Pruett said that prices to date "haven't been a major factor on polypropylene. …We haven't seen demand destruction. People are dying to get pounds." He added that regional PP prices could be up again in June, since PGP prices aren't expected to decline.

Regional PVC prices jumped 3 cents in May after rising 4 cents in April. Tight supplies and strong demand from the construction marker drove prices higher.

PVC makers are continuing to recover from the February storm as well. Market sources told Plastics News that PVC production in May at plants operated by Westlake Chemical Corp. and Formosa Plastics Corp. USA was affected by their ability to source chlorine feedstock.

Prices for suspension PVC now are up 21 cents so far in 2021 and up a net of 36.5 cents per pound since January 2020. PVC makers are seeking increases of 3 cents for June.

The construction market, which accounts for around 60 percent of U.S./Canadian PVC demand, has been particularly strong in early 2021. U.S. housing starts were at a 1.57 million annual rate for April, according to the Census Bureau.

PS prices surged up 15 cents per pound in May, following a major increase in prices of benzene feedstock, which is used to make styrene monomer. PS prices had increased 9 cents in April and now are up an eye-popping 40 cents so far in 2021.

Benzene prices in May had ballooned to $4.60 per gallon, an increase of almost 53 percent from April. Contract prices for benzene for June already have settled at $4.08 per gallon — down 11 percent — indicating that PS resin prices for the month could be lower as well.

North American PS demand in 2021 "hasn't seen a normal seasonal pickup," according to Robin Chesshier, a market analyst with RTI. "More restaurants and other places are opening up [after the pandemic], and that's affecting demand for takeout containers and other polystyrene products," she said.

Chesshier added that PS resin operating rates in the region are under 70 percent, a level that she said was low for this time of year. Regional PS demand through April was up 11 percent vs. the same period in 2020, but last year's totals were exceptionally low because of the pandemic. Styrene supplies also had been somewhat tight, but have recovered in most places, Chesshier said.

In PET, May prices were flat after rising 2 cents in April and 4 cents in March. Prices for the material now are up of 12 cents so far in 2021. Slight decreases in formula pricing canceled out slight increases in non-formula prices for the month, sources said.

On the ICIS webinar, vice president Antulio Borneo said that PET prices and production have been affected by limited supplies of purified terephthalic acid (PTA) and monoethylene glycol (MEG) feedstocks.

In feedstocks, West Texas Intermediate oil began May at $63.60 per barrel but had increased to around $66.30 by the end of the month for an increase of more than 4 percent.