Regional prices for PE, PVC and PET bottle resin slide in August

North American polyethylene resin prices continued a confusing summer in August, while regional prices for PVC and PET bottle resin were down for the month as well.

PE resin pricing has been the cause of much debate for most of the summer. Some PE buyers saw a 3-cent price drop in June. That 3-cent drop later spread through the rest of the market, reaching most buyers by the end of July.

Even as some buyers were assessing the 3-cent June/July drop, another 3-cent drop hit the market. This second drop — and a full 6-cent drop for the summer — was in place to most buyers by late August.

Sources said that momentum for the price declines may have come from less-than-robust domestic demand. Major PE makers have responded with attempts to raise prices by 3 cents per pound in August and 4 cents in September.

Esteban Sagel, principal of Chemical & Polymer Market Consultants in Houston, said in an email to Plastics News that there are "plenty of reasons" for the downward PE pricing trend.

"Some drivers that come to mind include global economic jitters related to the U.S.-China trade war and Brexit, as well as an excess surplus of material due to the completion of the first wave of projects in North America," he said. "Those new plants are sending large amounts of polyethylene to the international market."

Another market watcher thinks that the PE resin market "is struggling to absorb all the new capacity, so it's become a buyer's market."

ExxonMobil and Sasol have started up world-scale linear low density PE units this summer, he added, so those firms are working to gain share. "This is creating competitive situations for other suppliers," he said. "Also, I think many domestic processors saw downstream orders slow down around midyear."

"Producers are working the export levers as well as they can, but international markets have been weak, especially China."

A PE resin buyer with a major processor in the Midwest U.S. said "with about 3 billion more pounds [of PE capacity] coming onstream in a few months from Sasol and Formosa, it will be very difficult to get an increase through."

"Export volumes are very high and prices are low, so there's not a lot of ammunition to push an increase through," he added.

In North American PVC, prices ticked down by a penny per pound in August after being flat in July. Prices for the material had made a surprising 2-cent increase in June. Construction activity, which drives U.S. demand for the resin, has not been overly strong in 2019.

Through June, U.S. housing starts were down more than 4 percent vs. the same period in 2018, according to the U.S. Census Bureau. One PVC market watcher said U.S. PVC exports "are weakening, and the domestic market isn't much ahead of last year when we look at housing and other indicators." The source added that a shortage of workers has played a role in diminished results for U.S. housing.

North American PET bottle resin prices slid 2 cents in August, erasing a 1-cent gain from July. Both moves were tied into changes in feedstock prices. The July increase had reversed a surprising trend that had seen PET prices fall by 2 cents in June and by a total of 6 cents in the April-June period, when demand for bottled water and carbonated soft drinks typically is high.

The domestic PET market remains oversupplied, with bottled water usage attempting to make up for ongoing declines in carbonated soft drink demand.