Volatility continued in North American resin markets in June, with average selling prices for polyethylene, polypropylene and PVC all up over their May levels.
Prices for polystyrene were down for the month, with PET bottle resin prices flat. Prices for polycarbonate and nylons 6 and 6/6 also have increased since May 1.
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.
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."
The North American PP market continued to surprise in June, with prices increasing an average of 12 cents per pound. That surge followed a 13-cent hike that hit the market in May. Prior to that, regional PP prices had dropped 19.5 cents total in March-April. Factoring in previous increases, regional PP prices are up a net of 66.5 cents since December.
The June hike consisted of matching 4 cents of increases in price for polymer-grade propylene (PGP) feedstock and 8 cents of profit margin improvement that was successfully implemented by PP makers. Heading into the last week of June, the PGP hike was expected to be higher and there was doubt if PP makers would see all of the 8 in margin improvement they were seeking. They hadn't been successful in getting any of the 5 cents in margin they tried to pass in May.
The ultimate makeup of June's 12-cent hike came as a surprise to some market watchers, including Scott Newell, a market analyst with RTI.
Newell said that North American PP demand is strong across many markets, even though industry data shows a decline from last year. "The data shows sales, which are down because processors can't get material," Newell said.
Many PP makers in the region remain on force majeure sales allocations, as the supply chain continues to recover from the ice storm that hit Texas in February. Some producers now are seeking PP price hikes of 3 or 5 cents effective July 1 or 5 cents effective Aug. 1. Producers are not aligned on these moves, which would be in addition to any price changes from PGP. PP makers have gained more than 30 cents in margin improvement in the last year.
Newell said that regional PGP prices could be up 5-10 cents in July, but officials with Blue Clover LLC Polymer Solutions, a Hawthorne, N.Y.-based PP distributor, said in a note to customers that they "expect PGP pricing to trend lower over the next month as the supply situation improves."
PVC prices increased by 1.5 cents per pound in June, which was only half of the increase that producers had been seeking. Prices 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."
In the PS market, 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, 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 grow 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 foodservice ware account for more than half of North American PS sales.
In PET, June prices were flat for the second consecutive month after rising a total of 6 cents in March/April. Prices are up 12 cents so far in 2021.
Market sources said that PET prices and production have been affected by limited supplies of purified terephthalic acid (PTA) and monoethylene glycol (MEG) feedstocks.
In the engineering resins market, PC prices are up an average of 15 cents per pound, with nylon 6 and 6/6 each up 5 cents in that time frame. All three materials remain in tight supply, although production volumes are improving, according to sources contacted by Plastics News.
Prices for all three materials fell in mid-2020, as automotive production — a major market for all three — was reduced as the pandemic hit.
The February ice storm that hit Texas also affected production of PC and nylon resins, as well as production of the raw materials needed to make those materials. As a result, PC prices were up 30 cents, nylon 6 up 20 cents and nylon 6/6 up 40 cents in 2021, even before the recent increases.
In feedstocks, West Texas Intermediate oil began June at $66.30 per barrel, but had surged to $73.50 by the end of the month for an increase of almost 11 percent. Prices for natural gas, used as a feedstock in North American PE and PVC, began June at $2.99 per million British thermal units, but had jumped to $3.65 by the end of the month, an increase of just over 22 percent.