Feedstock costs push some resin prices up as experts expect more increases to come

North American selling prices for polypropylene and polystyrene resins increased in February, mainly as the result of higher feedstock costs.

The ongoing Ukraine crisis also is expected to keep upward pressure on both of those materials, as well as on other commodity or engineering resins. Russia launched a military assault on neighboring Ukraine on Feb. 23, a move that has sent global prices for crude oil and natural gas higher, even as financial markets have declined.

Regional PP prices were up 6 cents in February after dropping 3 cents in January and a total of 40 cents in the last four months of 2021. The 6-cent February hike matched a similar increase in price for polymer-grade propylene (PGP) feedstock.

On a Feb. 28 webinar hosted by the Manufacturers Association of Plastics Processors (MAPP), resin veteran Bruce Flannery said that although domestic PP is available, the impact of late-arriving imported PP "was short-lived."

"Domestic [PP] producers cut back production to match sales," added Flannery, commodities product director for resin distributor Amco Polymers in Orlando, Fla. "Now some people in the market are worried about a bullwhip effect, where everyone would destock at once."

Even with the pre-February 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. ExxonMobil Chemical also will add almost 1 billion pounds of capacity for polypropylene resin in Baton Rouge, La., by the end of the year.

Regional PS prices climbed 5 cents per pound in February after being flat for five consecutive months. The move was tied into an increase of 22 cents — about 7 percent — on benzene feedstock, which settled at $3.54 per gallon for February.

Smaller benzene increases in previous months hadn't been enough to move prices for PS. One market watcher told Plastics News that the Ukraine crisis "took out any real chance of a revision or rollback" on PS prices for the month.

On the webinar, Flannery said that North American PS supply and demand balance is improving, but that a lack of imports means that the Americas "are an island" that depends on local production. Flannery added that the PS market's improved balance might create new opportunities for PS to replace other resins that are in short supply. North American PS prices were up a net of 30 cents in 2021.

Regional prices for PE and PVC were flat in February. Flannery said that PE used in durables, such as high density PE for injection molding and blow molding, are seeing the highest demand among PE grades. He added that he "wouldn't be surprised to see a bounce in PE prices" because of the Ukraine crisis and that "increases are on the table."

Flannery and Amco engineering thermoplastics products director Jeff Schultz added on the webinar that makers of commodity and engineering resins continue to face logistical and other challenges that have carried over from 2021.

"Some force majeures have been lifted, but many producers are still on allocation to meet backlogs," Schultz said. "Domestic commodity producers have mostly recovered from shortages, but they're still seeing strong end market demand in early 2022, and inflation has been constant on engineering resins."

He added that ongoing shortages of glass fiber, flame retardants and other additives have continued to challenge plastics processors in 2022. Many of these materials are needed for compound and concentrate production.

The glass fiber shortage dates back to the first half of 2020, according to Schultz, when a large amount of global production was taken down at the start of the COVID-19 pandemic. The market soon recovered in the second half, but many dry chop fiberglass units need three to six months to restart. That downtime combined with logistics problems around Asian imports have caused major supply issues for glass fiber.

"The [glass fiber] market is improving and producers are increasing production, but it's not out of the woods yet, and might not be for the rest of the year," Schultz said.

Supply situations for many engineering resins — including ABS, polycarbonate, nylons 6 and 6/6, polybutylene terephthalate, acetal and thermoplastic polyurethanes — remain relatively tight, he added, although some are improving.

In the nylon market, Schultz said that "polymer supply is no longer a limiting factor. The real challenge is in compounds because of additives not being available." PC and PBT suppliers also are looking for additives, he added, while PC supplies also could be affected by maintenance turnarounds this year.

Broader logistics issues also are affecting markets for resin and many other products, according to Flannery. More than 10 loads of freight now are available for every truck in the U.S. The market is considered balanced when 2-3 loads are available.

"These are levels we've never seen before," Flannery said.

In the shipping market, ocean freight reliability was at 30-40 percent in 2021, its lowest level in recorded history. In 2019, the reliability rate was 70-85 percent. In spite of these results, global container trade is expected to grow 3.5-4 percent between 2022 and 2025, and freight costs have increased from $4,000 to $30,000 per container.

"As soon as containers empty in California, [shipping companies] just want to get them back on the boat so they can come back again," Flannery said. "They don't care if they're empty or not, because they were making money at $4,000 and now they're at $30,000. It's caused the whole market to go upside down."