Polymer Points: Resin price volatility continues in April

The rise of the resins continued in April as tight supplies of materials continued to be a challenge for processors across North America.

Regional selling prices for polyethylene, PVC, polystyrene and PET bottle resin all were up for the month. Average polypropylene resin prices were down because of operating conditions, while demand for that resin remained high.

Regional prices for low and linear low density PE surged an average of 9 cents per pound since April 1, with high density PE prices up 7 cents. Supplies of the material remain tight as producers look to recover from outages caused by Winter Storm Uri in February.

The April HDPE price increase at first was believed to be 9 cents, but the market eventually settled up to 7. This change is being shown as a 2-cent downward correction on this week's Plastics News resin pricing chart.

PE prices now are up a total of 28 cents so far in 2021 and are up 48 cents since January 2020. PE makers are seeking increases of 5-6 cents per pound for May.

Many producers still are operating under force majeure sales limits or other types of sales allocations. On average, North American PE processors are receiving 70 percent of their requested purchases, according to sources contacted by Plastics News.

Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas, said that allocations are moving higher than 70 percent but that demand is still exceeding supply.

According to Burns, regional PE makers are likely to stay on sales allocations "for as long as they can," and that even when supply improves, high prices might discourage processors from building inventory.

In the near term, North American PE supplies could be further tightened by a mechanical failure at a Nova Chemicals Corp. production site in Ontario, which has led the firm to place force majeure sales limits on PE resins.

Nova's force majeure covers all PE resins produced in the Sarnia region. A spokesperson said there were no injuries or environmental impacts from the event but that Nova didn't know how long the force majeure would be in place.

PP was the odd resin out again in April, with prices declining while those of other commodity resins rose. Prices for PP fell an average of 7 cents per pound even as demand for the material remained high.

The 7-cent drop for PP was the result of a 13-cent decline in price for polymer-grade propylene (PGP) feedstock, combined with 6 cents in margin improvement won by regional PP makers.

Although demand for PP remained high, PP production in the region still hasn't returned to its levels before Winter Storm Uri hit Texas in mid-February, knocking out almost 90 percent of PP production for a period of time. As a result, less propylene was consumed both in April and March, when PGP fell 18.5 cents, with PP down 12.5, with producers again gaining 6 cents in margin.

Prior to the 18.5-cent decline in PP prices in March-April, regional prices had rocketed up 61 cents in the three-month December-February period, as supplies of both resin and monomer already were tight.

May could bring another directional swing in PP prices, with PGP prices expected to be up 10 cents or more, according to market sources. If PP makers are able to get even more margin improvement, PP prices could see a double-digit jump.

Regional PVC prices jumped 4 cents per pound in April, as tight supplies and strong demand from the construction market drove prices higher.

PVC processors "would buy more if we had more," one PVC executive told Plastics News. "Based on demand, we could ship several million more tons a month if we had it."

PVC makers are continuing to recover from the February storm as well. Supplies of stabilizers and other additives needed to make PVC compounds remain particularly tight.

Prices for suspension PVC now are up 18 cents so far in 2021 and up a net of 33.5 cents per pound since January 2020. PVC makers are seeking increases of 3 cents for May.

The construction market, which accounts for around 60 percent of U.S./Canadian PVC demand, has been particularly strong in early 2021. About 55 percent of construction-based PVC demand comes from rigid pipe and tubing.

North American prices for solid PS surged 9 cents per pound in April, mainly as a result of higher prices for benzene feedstock, which is used to make styrene monomer. Benzene prices were up 38 cents for the month to $3.01 per gallon.

Solid PS prices now are up 25 cents so far in 2021 and 37 cents since January 2020. Benzene prices are up 78 cents in the last two months, an increase of almost 35 percent. Styrene supplies also have been tight, sources said, with operating rates at some Gulf Coast styrene operations at only 50-60 percent in recent months.

Market sources said that while PS has gained some sales with increased takeout sales from restaurants, the material has lost volume in some other end markets. Food packaging and food services account for more than half of North American PS sales.

In PET, a 2-cent April hike followed a 4-cent gain in March. Prices for the material now are up a total of 12 cents so far in 2021.

Selling prices for several engineering resins also have climbed since the start of the year. Prices for these materials are up because of production issues for the resins themselves or for raw materials needed to make the resins, as well as because of higher demand from automotive and other sectors.

Nylon 6 resin prices are up an average of 15 cents per pound so far this year, with prices for nylon 6/6 up 25 cents. Demand for both materials has rebounded as automotive production and sales have increased.

Regional prices for polycarbonate and ABS each are up an average of 30 cents since Jan. 1. As in nylon, both of those materials have benefited from increased demand from the automotive market. PC demand also has improved along with the electronics sector, while higher appliance sales have boosted ABS demand.