PP, PET join PE, PVC in a resin pricing slide in July

Updated: Improving supplies and softening demand sent North American prices for several commodity resins down in July.

Plastics News is reporting decreases for polyethylene, polypropylene, PVC and PET bottle resin prices.

PP continued its downward slide, tumbling 7 cents in July after a 10-cent drop in June. PET bottle resin prices dropped 12 cents in July, giving back almost all of a 13-cent June increase.

PE prices fell an average of 3 cents per pound while PVC fell 5 cents.

The 7-cent July drop for PP matched a 4-cent drop in polymer grade propylene (PGP) monomer feedstock and was increased by PP buyers winning an additional 3 cents from suppliers. Combined with other increases and decreases, PP prices now are down a net of 12 cents so far in 2022.

Market sources told Plastics News that regional PP demand has declined slightly in recent months. Strong North American gasoline demand also is increasing supplies of propylene, which is a byproduct of gas refining. Gas demand is up from the summer driving season and from refineries working to get back to full production after the pandemic.

PET bottle resin's 12-cent drop gave back almost all of a 13-cent June increase. Even with the July drop, prices for the materials are up a net of 36 cents so far in 2022.

According to market sources, the July PET price decline was the result of a large price decrease for paraxylene (PX) feedstock, combined with lower demand and higher inventories of PET.

Strong seasonal demand for bottled water and other beverages had played a role in earlier PET price increases, as well as a lack of new capacity and freight and logistics challenges. Higher gasoline demand also had lifted prices for PX, which also is used as a gas additive.

PE prices had been flat in June, after producers won a 3-cent hike in May after an extended battle.

Dow Inc.'s Packaging and Specialty Plastics unit — including PE resin — saw second-quarter sales grow 15 percent to $8.2 billion, although operating EBIT slid 30 percent to $1.4 billion. In a news release, officials with Midland, Mich.-based Dow said the unit's sales volume was up 5 percent for the quarter, primarily from gains in energy, infrastructure and packaging.

At LyondellBasell Industries of Houston, the firm's olefins and polyolefins Americas unit, including PE and polypropylene, posted second-quarter sales growth of 9 percent to almost $4.1 billion, even as operating profit slumped 45 percent to $768 million. The unit's PE resin sales volume in pounds grew 6 percent to 1.75 billion pounds for the quarter.

Regional PE supplies will be impacted this year by the startup of Shell Chemical's massive 3 billion pound capacity PE unit in Monaca, Pa. Market watchers said the site could be shipping commercial amounts of PE by the end of summer.

"I am, and I am sure converters are as well, concerned about where the economy may be headed," said Esteban Sagel, principal with Chemical & Polymer Market Consultants in Houston. "Uncertainty about the economy, together with erosion in spot prices, likely has [PE and PP] buyers on the sidelines waiting for prices to continue to slide."

Sagel added that other economic concerns include logistics because of potential labor conflicts at railroads, rising costs of ethane and propane feedstocks and how a recession could affect consumer demand.

For suspension PVC, a 5-cent drop ended two months of flat pricing. Regional PVC prices now are down a net of 4 cents since Jan. 1.

Construction activity is a main driver of PVC consumption. U.S. housing start activity in June came in at an annual rate of almost 1.69 million, up more than 1 percent vs. the same month in 2021, but down almost 1 vs. May. This trend might be an indication of PVC demand leveling off.

Market watchers also said that higher interest rates likely will reduce new housing starts, which would affect PVC demand. The federal funds interest rate began the year at 0.25 percent but had risen to 2.5 percent by the end of July after two 0.75 percent hikes by the Federal Reserve, the largest since 1994.

The rate now is the highest it has been since early 2020, when the COVID-19 pandemic led officials to reduce the rate to boost the economy. The Fed has been increasing the rates in an effort to tame inflation.