North American resin availability is improving in the wake of recent outages, but many companies throughout the supply chain still can't get all the material they need.
In the wake of Winter Storm Uri, which hit Texas and the Gulf Coast in mid-February, many material suppliers put customers on force majeure sales limits or other types of allocation.
LyondellBasell Industries of Houston operates multiples sites making polyethylene, polypropylene and related resins and compounds in Texas. In an email to Plastics News, spokeswoman Chevalier Gray said that "nearly all of our assets, except for Corpus Christi, are back to normal operations."
A spokesman for Wilmington, Del.-based DuPont Co. said that the firm still has force majeure limits in place for nylon, polybutylene terephthalate and several other materials. DuPont "is taking commercially reasonable steps to mitigate the effects of these shortages on its customers, but many of the upstream supply constraints persist," he said.
"We take this matter very seriously and recognize the importance of supply reliability to meet the needs of our customers," he added.
At Midland, Mich.-based Dow Inc., the firm "has continued to restart units and ramp rates through March and into April, as we manage a few raw material constraints and freeze damage repairs," a spokesman said.
Market sources indicated that regional operating rates for PE and PP were back to 70 percent by the end of March. PVC production also had improved, but production of PVC compounds was still being affected by limited supplies of additives, sources said.
In spite of some improvement, North American resin distributors are facing ongoing challenges in getting material to their customers.
"Polyethylene is a little better than it was two weeks ago, but polypropylene hasn't improved much," said Marc Fern, executive vice president at M. Holland Co. in Northbrook, Ill. "No one's getting everything they want. It could be May or early June until supply is back in balance."
Fern added that materials such as acetal, nylon and ABS are in demand and that the current polystyrene market is "very difficult."
He also pointed out that the current resin shortage is the result of several events that began early last year, including shutdowns related to COVID-19 and a pair of hurricanes that affected production.
"We've never faced one disruption after another like this," Fern said.
Distribution veterans Kevin Chase and Dave Dever both said the current market is the most extreme that they've seen in their long careers.
"I've never seen such widespread raw material market tightness," said Chase, president of Chase Plastic Services Inc. in Clarkston, Mich. "We know the current environment will change and the supply chain will rebalance. The issue we're currently struggling with is when will this happen?"
Dever, executive vice president at Osterman & Co. in Cheshire, Conn., added that he's never seen such supply-demand imbalance across all polymers.
"It's unprecedented and we don't see the light at the end of the tunnel anytime soon," he said. "Osterman is doing everything possible with our supply partner relationships to keep our valued customers up and running to support their increased business."
At resin distributor PolySource Inc. in Independence, Mo., CEO Grant John said that "our team is working extremely hard to help our existing customers every day by understanding the level of urgency and evaluating all the important factors to determine how we help."
"We are also doing our best to help new prospects and customers where we can," he added. "Our team continues to collaborate daily to help our customers navigate these challenging times."
Compounders and concentrate makers in the region are handling similar challenges.
"We're facing the same snarled supply chains as everyone else," said Matt Barr, vice chairman at Chroma Color Corp. in McHenry, Ill. "But our folks in production have done a masterful job."
Chroma at times has been "hand to mouth" on some materials, but hasn't had any supply chain interruptions, according to Chief Operating Officer Jeff Smink.
Barr added that Chroma's G3 technology can help customers offset higher resin costs and create production capacity. Materials made with G3 technology can have higher color loadings and reduced cycle times.
In a recent LinkedIn post, Millennium Plastics LLC President Adam Smith identified several ways that injection molders can reduce the impact of force majeure sales limits. Those steps included reducing scrap, not wasting material while purging, knowing exactly how many shots are in a barrel and saving and using more regrind.
Smith launched injection molder Millennium in Clinton Township, Mich., last year. He has previous experience with Prism Plastics Inc. and Stihl Inc.
In a phone interview with Plastics News, Smith said cooperation can help molders get through supply challenges. "There can be a disconnect between the shop floor and people who work on supply on a daily basis," he added.
The shortages also have had a major effect on North American resin prices. Prices for all grades of PE moved up 7 cents per pound in March, after increasing by that same amount in February. Prices had increased by 5 cents in both January and December. North American PE prices are up a net of 39 cents since January 2020.
Prices for suspension PVC moved up 7 cents per pound in March, following hikes of 3 cents in February and 4 cents in January. North American PVC prices now are up a net of 29.5 cents per pound since January 2020.
In solid PS, prices moved up 9 cents per pound in March. Prices had climbed 2 cents in February and 5 cents in January. PS prices since January 2020 now are up a net of 28 cents. Prices for PET bottle resin moved up an average of 4 cents per pound in March after increasing 3 cents in both February and January. PET prices now are up a net of 8.5 cents per pound since January 2020.
PP prices have followed a more unusual pattern, falling an average of 12.5 cents per pound in March. Demand for the material remained strong across many end markets. The price decline was the result of a demand drop for propylene monomer feedstock.
Regional PP prices had soared an incredible 61 cents per pound since December. That run included hikes of 14 cents in December, 13 cents in January and a shock-inducing 34 cents in February.