Polypropylene was the odd resin out in March, with North American prices falling, while prices for other commodity resins in the region saw increases.
PP prices fell an average of 12.5 cents per pound in March. Demand for the material remained strong across many end markets. The price decline was the result of a demand drop for propylene monomer feedstock.
Propylene demand was down as many PP resin plants were struggling to come back from outages caused by Winter Storm Uri, which hit Texas in mid-February. Regional propylene monomer prices were down 18.5 cents per pound in March.
At its most extreme, North American PP plants were operating at only 12 percent of capacity. That number had improved to about 70 percent by the end of March, sources said, as plants came back online at reduced rates.
Regional PP prices had soared an incredible 61 cents per pound since December. That run included hikes of 14 cents in December, 13 cents in January and a shock-inducing 34 cents in February.
Resin supplies already had been tight after a pair of hurricanes hit the Gulf Coast in August and September. Propylene supplies have been constricted since early 2020, as lower U.S. gasoline consumption because of the COVID-19 pandemic has led to lower refinery operating rates. More than half of North American propylene is a byproduct of gasoline production.
PP demand in many consumer and industrial goods remains high. But the price drops of March may give way to increases in April, as suppliers are seeking hikes of 6 cents per pound on top of whatever changes hit propylene.
"Polypropylene demand is still high, even at these prices," said Scott Newell, a PP market analyst with Resin Technology Inc. in Fort Worth, Texas. "This isn't the response we'd normally see."
Newell added that some PP processors have had to cut back on their own production of finished products by 20-40 percent because of a lack of resin. Others have added a surcharge on PP products because of high resin prices.
Global supply chain problems, including the recent blockage of the Suez Canal, are preventing PP imports from reaching North America as they have in previous years, according to Phil Karig, managing director of Mathelin Bay Associates in St. Louis.
Strong demand and tight supplies sent prices for polyethylene, PVC, solid polystyrene and PET bottle resin up in March. As with PP, resin makers are working to recover from Winter Storm Uri. Although many plants have restarted, most are operating at reduced rates.
Prices for all grades of PE moved up 7 cents per pound in March, after increasing by that same amount in February. Prices had increased by 5 cents in both January and December, as the market was tight even before the storm hit. North American PE prices are up a net of 39 cents since January 2020.
Prices for suspension PVC moved up 7 cents per pound in March, following hikes of 3 cents in February and 4 cents in January. Demand is up, as processors that sell products into the building and construction markets look to build inventories.
North American PVC prices now are up a net of 29.5 cents per pound since January 2020. Construction-related uses, including pipe, account for around 60 percent of PVC sales in the U.S. and Canada.
In solid PS, prices moved up 9 cents per pound in March. Prices had climbed 2 cents in February and 5 cents in January. The March increase followed a 40-cent-per-gallon increase in the price for benzene, which is used to make styrene monomer.
PS prices since January 2020 now are up a net of 28 cents. Benzene prices had been down slightly in February but closed at $2.83 per gallon for March.
Prices for PET bottle resin moved up an average of 4 cents per pound in March after increasing 3 cents in both February and January. Beverage suppliers are building inventories in advance of higher consumption during warmer summer months.
Although production of PET bottle resin itself was not much affected by the cold snap, some plants that make feedstocks needed to make the resin were down. PET prices now are up a net of 8.5 cents per pound since January 2020.
In a March 23 webinar hosted by the Manufacturers Association for Plastics Processors, market veteran Bruce Flannery said regional operating rates for PE and PP had improved to 75 percent after bottoming out at 12 percent at the height of storm damage. He added that PE/PP operating rates could be back to 85 percent by the end of the month.
"These supply challenges aren't going away quickly," said Flannery, commodities product director for resin distributor Amco Polymers in Orlando, Fla. "Suppliers are incentivized to come back up as soon as possible because of these high prices. And high prices haven't driven away demand."
Amco Engineering Thermoplastics Product Director Jeff Schultz added on the webinar that supplies of many engineering resins also are very tight. That list includes polycarbonate, nylons 6 and 6/6 and many specialty styrenics.
Schultz said makers of both commodity and engineering resins "are shipping from production, not inventory."
"Material isn't even going to warehouses before it's being shipped out," he said.
In feedstocks, prices that had been sent higher in February by the Texas ice storm declined in March. West Texas Intermediate oil began March at $61.50 per barrel but had dropped to around $59.20 by the end of the month for a decline of almost 4 percent.
Prices for natural gas, used as a feedstock in North American PE and PVC, began March $2.77 per million British thermal units but had receded to $2.61 by the end of the month, a decline of almost 6 percent.