Three major commodity resins saw higher prices in the North American market in September.
Prices for polyethylene, polypropylene and polystyrene resins were up for the month, according to sources contacted by Plastics News. All three increases were somewhat surprising to buyers, since they came relatively late in the year, when pricing activity typically slows down.
PE resin prices moved up an average of 3 cents per pound for the second consecutive month in September. Regional PE prices had been flat in July after dropping 3 cents in June. Counting the September increase, regional PE prices now are up a net of 9 cents so far in 2023.
Market watchers said higher exports of PE from North America tightened domestic supplies of the material and allowed the September hike to take hold, even though PE demand in the region hasn't been strong this year.
"Exports are driving the narrative," market analyst Mike Burns said. He added that North American PE makers "need exports now."
In an email to PN, market analyst David Barry said he believes the main driver of recent PE price increases has been export demand.
"PE suppliers have really upped their export game this year, and we're seeing that reflected in U.S. trade data," he added. "Overall domestic demand is still not robust."
Barry, who is with PetroChem Wire in Houston, also said third-party export sales "have definitely slowed down … and a lot of buyers are anticipating a downward price correction for PE in the fourth quarter."
Market analyst Esteban Sagel, principal of Chemical & Polymer Market Consultants in Houston, said higher oil prices make U.S. PE exports very competitive. Global PE markets tend to follow oil prices, although producers in North America and the Middle East use lower-priced natural gas as a feedstock.
As recently as the mid-2000s, exports made up only about 20 percent of North American PE sales. Since then, increased access to shale gas and oil feedstocks have allowed producers to add large amounts of capacity with an eye on the export market. Exports now account for more than 40 percent of North American PE sales.
Production issues at plants operated by Chevron Phillips Chemical Co. in Texas and by Nova Chemicals in Ontario also have affected PE supplies in the region. Both firms have put force majeure supply limits in place at those locations.
Regional PE makers now are seeking increases of 3 cents per pound for October. Market sources were split on the chances of those hikes being successful.
"October's increase is a tough sell after September's increase barely got over the finish line," one source said.