February prices mixed for PVC, polypropylene and PET bottle resin

U.S. housing activity drove North American suspension PVC prices up in February, while soft demand sent prices for polypropylene and PET bottle resin down for the month.

Regional prices for polyethylene and polystyrene were flat for the month. All makers of major commodity resins now are grappling with the potential impact of the coronavirus, which on March 11 was confirmed to be a global pandemic by the World Health Organization.

PVC prices moved up an average of 2 cents per pound in February on the heels of a 3-cent hike in January. Resin makers had been seeking a 3-cent hike in February, but in most cases were able to get 2 cents of that attempt.

Market sources said that these early-year PVC price hikes have been the result of tighter supplies and of processors building inventories in advance of spring construction. U.S. construction activity was stronger than expected in late 2019. Rigid pipe and other construction applications account for more than half of PVC consumption in the U.S. and Canada.

PVC maker Westlake Chemical Corp. added almost 640 million pounds of new annual resin capacity in late 2019. Shintech Inc. and Formosa Plastics Corp. USA are expected to add almost 940 million pounds of annual capacity in 2021.

Full-year financial results for Houston-based Westlake left a lot to be desired in 2019. The firm's vinyls unit — including PVC resin, PVC pipes and fittings, and PVC siding and profiles for fencing, decking, windows and doors — reported 2019 sales down 4 percent to just over $6.3 billion. In 2019 operating profit, Westlake's vinyls unit saw results decline almost 51 percent to $451 million.

For PP, the 1-cent February price drop was the result of improved supplies of propylene monomer feedstock and of relatively soft early-year demand. Prices for the material also had declined by 1 cent in January and by 2.5 cents in December.

North American PP sales were up less than 2 percent in 2019. Factoring out exports left domestic demand slightly negative for the year. PP maker Braskem is adding just over 1 billion pounds of annual production in La Porte, Texas, in the second quarter of 2020.

On a March 11 webinar hosted by Plastics News, PP market analyst Scott Newell of Resin Technology Inc. said that North American PP demand has not been very strong in early 2020. He added that PP operating rates of 85 percent in 2019 were at their lowest level in the last five years.

Regional prices for PET declined by an average of 1 cent in February after being flat in January. Prices also had fallen 1 cent in both November and December.

Although PET demand increases in warmer months with higher beverage consumption, the domestic PET market remains oversupplied. Bottled water usage in the region has been attempting to make up for ongoing declines in carbonated soft drink demand.

North American PE prices were flat in February after seeing a surprising 4-cent increase in January. On the capacity front, another 1.8 billion pounds of PE capacity is set to come on line this year from Formosa Plastics Corp. USA. That's on top of almost 4.5 billion pounds added from three suppliers in 2019 and more than 8 billion pounds added from four suppliers in 2017-18.

On the March 11 webinar, RTI PE market analyst Mike Burns said that the North American market remains oversupplied and has become more dependent on exports in recent years. Even with large amounts of new capacity, recent PE operating rates have been above 90 percent, he added.

Burns and Newell each said that PE and PP markets are likely to be affected by the coronavirus. Demand for both materials could be affected, with PE in particular affected if North American suppliers have to reduce their exports to foreign markets.

North American solid PS prices were flat for the third consecutive month in February. Flat pricing again came as a surprise to some PS market watchers, since prices for benzene feedstock, which is used to make styrene monomer, were up just over 4 percent for the month.

Major resin makers are monitoring the impact of the coronavirus as it has spread to many parts of the world. Engineering resin makers DuPont Co. and Covestro AG said in early March that they had reduced production of their materials in China.

A Covestro spokesperson told Plastics News that the firm "is actively working to ensure the continuity of our business in order to minimize any potential disruptions to customers around the world." A spokesperson for DuPont added that company officials "are reviewing orders and our ability to fulfill them from other production locations, however we expect some delays are possible."

Covestro is a major producer of polycarbonate, while DuPont is a leading producer of nylon resins. Both firms also make a wide range of specialty plastics, as well as some downstream products.

Eastman Chemical Co.'s plant in Wuhan, China, remained out of production as of March 11. The plant makes Benzoflex-brand benzoate ester plasticizers, benzoic acid and sodium benzoate for adhesives, sealants, flooring, coatings and inks.

In a statement posted on its website, officials with Eastman in Kingsport, Tenn., said that materials produced in Wuhan are being supplied from an alternate manufacturing location at this time.

"The issue we continue to face is the slowdown for logistics as a result of slowdown at shipping ports and the shortage of trucking we're seeing country to country," Eastman officials said.

"We are working to secure future vessel space allocations and using track and trace of all shipments in transit to provide customers with updated estimated arrival times," they added.

In feedstocks used to make commodity plastics, West Texas Intermediate crude oil prices began February at $51.60 per barrel but had slid more than 13 percent to $44.80 by the end of the month. With global markets crashing, oil prices were down another 31 percent to $30.80 in early trading March 12.

Regional prices for natural gas also slumped almost 8 percent to $1.68 per million British thermal units during February. Prices for that material surprisingly had rebounded 6 percent to $1.78 in early trading March 12.