Regional polyethylene resin prices were flat in May after producers battled their way to an increase of 3 cents per pound in April. That hike was half of what they had been seeking earlier in the year.
Buyers had resisted the April increase before it took hold late in the month, sources said. Regional prices for all PE grades had been flat for the first three months of 2019, as buyers were able to ward off the 6-cent hike, which major PE makers first had announced for Jan. 1.
But PE makers are seeking the other 3 cents of that move now in June, but sources said its chances of success aren't great, with momentum stalled in May after April's pricing battle.
Market watchers cited lower global demand, especially from packaging, as the top reason why PE makers have had difficulty in raising prices. Oil prices also affect global resin markets, even though most North American PE is made from natural gas. Sources added that the challenge facing the global PE market is an overly abundant supply of material.
Many North American PE makers have added capacity in recent years to capitalize on newfound supplies of natural gas in the region. Much of this new supply has been tagged for export markets, although domestic PE demand has remained solid.
The wave of new U.S. PE capacity is expected to peak this year, with ExxonMobil Chemical, LyondellBasell Industries, Formosa Plastics Corp. USA and Sasol all adding capacity on the U.S. Gulf Coast. Shell Chemical also is expected to open a major new PE unit near Pittsburgh around 2021.
The ongoing tariff war between the U.S. and China also is making it more difficult for PE makers to export their materials. Chances of tariffs with Mexico have decreased. That's a good sign for U.S. PE makers who count on Mexico is a major export market.
Regional prices for solid polystyrene resin were flat in May, even as prices for benzene feedstock in the regions increased about 3 percent. PS prices had jumped 4 cents in April when benzene prices surged by a larger amount than they did in May.
The April PS hike was the second consecutive monthly increase for the material. Prices in March had moved up an average of 2 cents per pound.
Sources said that North American PS sales through April were up about 1 percent, with gains in consumer products and electrical/electronic offset by sizable losses in construction.
Regional PVC resin prices were flat in May after being down 2 cents on April. The April decline was acknowledged only after lengthy negotiations between buyers and suppliers.
PVC makers now are trying to push through a 2 cent hike for June, but demand from the U.S. construction market — PVC's main end market — remains less than robust. Through April, U.S. housing starts were down more than 3 percent vs. the same period in 2018, according to the U.S. Census Bureau.
Regional PVC prices had been flat in March after moving up an average of 2 cents per pound in February. The February hike ended a streak of nine consecutive months of flat pricing for North American PVC.
In feedstocks used to make commodity plastics, West Texas Intermediate crude oil prices began May near $64 per barrel but had declined to $53.50 by the end of the month for a decrease of more than 16 percent. Regional prices for natural gas declined from $2.65 per million British thermal units (Btus) to $2.40 in the same comparison for a drop of more than 9 percent.