North American prices for PVC, polypropylene and PET bottle resin were all on the move in February.
Strong U.S. housing activity drove North American suspension PVC prices up, while soft demand sent regional prices for polypropylene and PET bottle resin down for the month.
PVC prices moved up an average of 2 cents per pound in February on the heels of a 3-cent hike in January. Resin makers had been seeking a 3-cent hike in February, but in most cases were able to get 2 cents of that attempt.
Market sources said that these early-year PVC price hikes have been the result of tighter supplies and of processors building inventories in advance of spring construction. U.S. construction activity was stronger than expected in late 2019. Rigid pipe and other construction applications account for more than half of PVC consumption in the U.S. and Canada.
PVC maker Westlake Chemical Corp. added almost 640 million pounds of new annual resin capacity in late 2019. Shintech Inc. and Formosa Plastics Corp. USA are expected to add a total of almost 940 million pounds of annual capacity in 2021.
Full-year financial results for Houston-based Westlake left a lot to be desired in 2019. The firm's vinyls unit — including PVC resin, PVC pipes and fittings, and PVC siding and profiles for fencing, decking, windows and doors — reported 2019 sales down 4 percent to just over $6.3 billion. That unit accounted for almost 78 percent of the firm's sales in 2019. In 2019 operating profit, Westlake's vinyls unit saw results decline almost 51 percent to $451 million.
For PP, the 1-cent February price drop was the result of improved supplies of propylene monomer feedstock and of relatively soft early-year demand. Prices for the material also had declined by 1 cent in January and by 2.5 cents in December.
North American PP sales were up less than 2 percent in 2019. Factoring out exports left domestic demand slightly negative for the year. PP maker Braskem is adding just over 1 billion pounds of annual production in La Porte, Texas, in the second quarter of 2020.
North American PP demand "has generally been struggling for several months, with a lot of uncertainty [now] entering the market because of the coronavirus," PP market analyst Scott Newell of Resin Technology Inc. said.
Regional prices for PET declined by an average of 1 cent in February after being flat in January. Prices also had fallen 1 cent in both November and December.
Although PET demand increases in warmer months with higher beverage consumption, the domestic PET market remains oversupplied. Bottled water usage in the region has been attempting to make up for ongoing declines in carbonated soft drink demand.