North American prices for polyethylene and polypropylene resins continued to drop as 2021 came to a close.
Average selling prices for PE slid 5 cents per pound in December, while PP prices tumbled 15 cents, according to buyers and sellers contacted by Plastics News. It's the third consecutive 5-cent drop seen in the PE market. The October drop was the first seen in 17 months, as prices had jumped starting in early 2020 when pandemic-related demand couldn't be met because of weather-related production outages.
"Demand is still strong [for PE], but some of it is a backlog from buyers who were holding off while waiting for lower prices," one resin distribution executive told PN.
Mike Burns, a PE market analyst with Resin Technology Inc. in Fort Worth, Texas, said that "warehouses are full [of PE], and exports can't get out because of a lack of containers or other supply chain problems."
Market sources don't expect PE or PP supplies to be affected by a Dec. 23 fire at ExxonMobil Chemical's major refinery and petrochemicals site in Baytown, Texas. ExxonMobil makes PP and the feedstocks ethylene and propylene in Baytown, as well as PE at nearby Mont Belvieu. Four workers were injured in the fire, which, according to media reports, involved naphtha, an ethylene feedstock.
Although PE prices dropped 15 cents in late 2021, the market finished the year up a net of 28 cents, according to the PN resin pricing chart.
More PE capacity for the region will be available this year when Shell Polymers opens a major unit near Pittsburgh. That location will have annual production capacity of more than 3 billion pounds and is expected to come online during the first quarter. Shell officials have said they expect most of that material to be sold within North America.
Regional PP prices were down 15 cents in December after slipping 13 cents in November. Market sources said the December price drop was a combination of 10 cents in lower prices for polymer-grade propylene feedstock and 5 cents in margin reduction. PP prices were down a total of 40 cents in the last four months of 2021 after seeing huge price hikes since early 2020.
"We're seeing customers have more [PP] inventory than they've had in the past," said Gerard Selvaggio, a partner at New York City-area PP distributor Blue Clover LLC Polymer Solutions. "Plus they're less concerned about supply being there because of weather issues.
"The [PP] market might still be tight, and demand is strong, but we might see lower prices again in January," he added. "At some point, it becomes a psychological effect because prices have been falling for a few months."
One market source said that regional PP demand has lessened a bit, allowing supply to catch up.
"PP suppliers were building inventory every month and it swelled up," he added.
The source also said that although capacity utilization for North American PP was only around 80 percent in November, record levels of PP imports are affecting prices and supplies. Some of this material was ordered earlier in 2021 but didn't arrive until later because of shipping delays.
Even with the late-year declines, PP prices are up a net of 39.5 cents since December 2020. North American PP supplies will be boosted in 2022 when Inter Pipeline Ltd.'s Heartland Petrochemical Complex brings more than 1 billion pounds of new capacity online in Strathcona County, Alberta.