More resin price changes reflect high demand, limited supply

North American resin markets continued to move in June, with prices for polyethylene and PVC up, while prices for polystyrene were on the decline.

Regional prices for all grades of PE were up an average of 5 cents per pound for the month, according to buyers and market watchers contacted by Plastics News. Makers of high density PE were attempting to add another 2 cents to that total, but that increase had not gone through to most buyers as of June 24.

Although PE supplies have been improving since a February ice storm hit Texas and disrupted much PE output, some supply chain challenges remain. Most recently, LyondellBasell Industries declared force majeure on linear low density PE made in La Porte, Texas.

In a June 17 customer letter obtained by Plastics News, LyondellBasell officials said force majeure was needed because of "an equipment failure beyond our reasonable control" at a reactor in La Porte.

Most regional PE prices had increased 5 cents in May and now are up 38 cents so far in 2021 and 58 cents since January 2020. HDPE prices are up 2 cents less than low and linear low density PE. The June price hike is the seventh consecutive for the PE market.

Market analyst Mike Burns said in an email that without additional disruptions, June PE inventory "should help aid the 90-day recovery." Burns is with Resin Technology Inc. in Fort Worth, Texas.

"There's still some tightness in the market," added David Barry, a market analyst with PetroChem Wire in Houston. "Buyers can't find everything they need, so they're paying what they have to pay."

A PE buyer in the Midwestern U.S. said the string of price increases "is getting pretty ridiculous," especially in light of recent lower prices for ethylene feedstock.

PE makers now are seeking increases of 5 cents per pound effective July 1. In spite of the multiple price hikes, Barry said that "it's dangerous to bet against price increases in this environment."

Regional PVC prices increased by 1.5 cents per pound in June, which was only half of the increase that producers had been seeking. Prices for the material were up 3 cents in May and have increased 22.5 cents so far in 2021 and a net of 38 cents since January 2020.

"PVC is really tight," one production executive said. "We're still not exporting much. July is booked solid."

The executive added that raw material shortages "are probably slowing down resin sales. ... All additives are in very short supply. … The market is very hand to mouth."

The construction market, which accounts for around 60 percent of U.S./Canadian PVC demand, has been particularly strong in 2021. U.S. housing starts were at an annual rate of 1.57 million for May, according to the Census Bureau. That number is up 4 percent vs. April but up 50 percent vs. May 2020, as the COVID-19 pandemic impacted construction activity.

Supplies of specialty PVC grades made by Formosa Plastics Corp. USA have been impacted by a June 5 fire at a production unit in Point Comfort, Texas. No one was hurt in the fire, which officials said caused "a significant impact" to specialty PVC production.

As a result of the fire, Formosa extended force majeure sales limits for all of its Formolon-brand specialty PVC resin grades. Officials said that shipment delays "are to be expected" and that orders for all products "will be subject to our ability to supply."

In the PS market, regional PS prices tumbled 8 cents per pound in June after jumping up 15 cents in May. PS prices again followed benzene feedstock, which is used to make styrene monomer.

Even with the decline, regional PS prices are up a net of 32 cents so far in 2021.

Benzene prices in June were down 52 cents to $4.08 per gallon, a slide of more than 11 percent vs. May. Contract prices for benzene for July are expected to be down again, which could lead to lower prices for PS resin.

Barry at PetroChem Wire said that North American PS demand "remains in contraction," even though the market saw sales growth in May, as some buyers restocked their inventories.

Market sources said the reopening of restaurants may be having a negative impact on demand for takeout containers, cutlery and other PS products. Food packaging and food services account for more than half of North American PS sales.