Blame feedstocks, supply chain issues as resin prices climb

March brought higher prices for many commodity resins in North America, and April could bring more of the same.

Higher feedstock and energy costs and multiple supply chain issues sent North American prices for polyethylene, polypropylene, polystyrene, PVC, polycarbonate and PET bottle resins up during the month. Regional PE and PS prices each were up an average of 4 cents per pound in that time frame, while PP prices were up an average of 10 cents.

Regional PVC prices ticked up 1 cent per pound, with PET up 7 cents and PC up 10 cents, according to market sources contacted by Plastics News.

The ongoing Ukraine crisis has sent global oil prices up since Russia invaded that nation Feb. 24. West Texas intermediate crude oil prices closed around $107 per barrel March 30, up about 16 percent since Feb. 24. Prices had been above $120 earlier in the month and closed near $103 April 20.

That's had an impact on gasoline prices, as well as on prices for natural gas feedstock. Natural gas prices were up about 22 percent between Feb. 24 and March 30. Prices for that material have continued to climb and closed at $6.94 April 20 — up another 23 percent since March 30.

The 4-cent PE hike in March came after prices had been flat for two consecutive months. Regional PE prices had dropped 15 cents in the last three months of 2021.

PE buyers had resisted the 4-cent move before it pushed through in March. Even though feedstock prices are higher and demand is strong, supply chain challenges have prevented North American PE makers from exporting as much PE as they want to.

"Rail cars are seeing long turnaround times and there aren't a lot of shipping containers," one market watcher told Plastics News. "If this keeps up, [PE] producers are going to have to cut production."

The export market has taken on added importance for North American PE makers, as much of the new capacity added in the last decade to make use of shale gas feedstock has been aimed at export markets. PE makers now are working on increases of 5-7 cents for April.

The 10-cent March hike on PP matched a similar increase in price for polymer-grade propylene (PGP) monomer. Prices climbed for that material in part because some propylene in the region is a byproduct of gasoline refining. 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.

North American PP supplies will be boosted in 2022 when Inter Pipeline Ltd. and ExxonMobil Chemical add roughly 2 billion pounds of capacity at separate locations. But in the near term, North American PP supplies could be tightened by several production issues.

LyondellBasell Industries announced force majeure supply limits on 32 PP grades made in Lake Charles, La., because of a gearbox failure. Market sources said production at Braskem SA's PP plant in La Porte, Texas, also has been affected by a gearbox failure. Sources added that two PP units operated by Ineos Group in Alvin, Texas, and Carson, Calif., also are down.

As of April 19, PGP prices for the month were expected to be anywhere from down 2 cents to up 3 cents. PP makers were pushing for an additional 6 cents in margin expansion on top of changes to PGP.

In PS, prices in March rose an average of 4 cents, following higher prices for benzene, which is used to make styrene monomer. Regional PS prices had been up 5 cents in February after being flat for five consecutive months.

Benzene prices for March closed at $3.78 per gallon, up almost 7 percent vs. February. One distribution executive told PN that lower production from PS maker Americas Styrenics and an inability to source lower-priced imported PS could send North American PS prices higher in April. Producers are seeking a 9-cent hike for the month.

Regional PET prices surged again in March, climbing an average of 7 cents per pound after rising a total of 20 cents in January and February. As in previous months, the March hike was caused by supply tightness and higher feedstock costs, as well as by freight and logistics challenges. PET prices were up 26 cents in 2021.

PVC prices ticked upon an average of 1 cent per pound in March after tough negotiations between buyers and sellers. Some accounts saw a slightly higher increase, while others were flat. The 1-cent increase reflects the market average.

Regional PVC prices were flat in February after dipping 3 cents in January. Prices for the material increased 31.5 cents in 2021. Market veteran Esteban Sagel told PN that PVC buyers believe availability is no longer an issue and inventories have recovered.

"With export warehouses packed and logistics making exports hard, buyers expect additional product may become available for domestic markets," said Sagel, principal of Chemical & Polymer Market Consultants in Houston. "For products like PVC or polyethylene, I'm not sure how long producers can hold onto the current high prices or justify even higher prices."

Construction activity is a main driver of PVC consumption. U.S. housing start activity in March came in at a 1.79 million annual rate, up more than 3 percent vs. the same month in 2021, but flat vs. February. This trend would indicate that PVC demand could be leveling off.

In PC, prices moved up an average of 10 cents after climbing 9 cents in February and 25 cents in the second half of 2021.

Sabic's PC resin plant in Burkville, Ala., is down until mid-May for a maintenance turnaround, sources said, further affecting supplies in North America. That plant represents about 10 percent of PC capacity in the region, according to industry data. North American PC demand from appliance, automotive and electrical markets remains strong, sources added.

West Texas Intermediate oil prices opened March at $95.70 per barrel and had climbed to $100.30 by the end of the month, for an increase of 4.5 percent.

Markets for natural gas, which is used as a feedstock to make PE and PVC, started March at $4.40 per million British thermal units but had jumped to $5.64 — a hike of more than 28 percent — by the end of the month.