Resin pricing rockets up again in May

North American prices for polypropylene and polystyrene resins rocketed up again in May.

Regional PP prices ended a two-month slide by surging upward 13 cents per pound, matching a similar increase in price for polymer-grade propylene feedstock. PP prices had fallen a total of 19.5 cents in March and April, as resin units consumed less PGP while recovering from the effects of the winter storm that hit Texas in February.

PP makers had attempted to add 5 cents in margin improvement onto the 13-cent May hike but were unsuccessful, as the move wasn't supported by all producers, market sources told Plastics News. Producers had gained 12 cents in margin in the March and April time period, as the 19.5-cent PP drop was less than the 31.5-cent drop seen by PGP.

Prior to these moves, regional PP prices had soared an incredible 61 cents in the three-month December-February period because of tight supplies of both resin and PGP.

Regional PP demand remains strong, although the market continues to work out supply issues, according to market veteran Craig Blizzard, vice president of Blizzard Consulting Group LLC in West Chester, Pa.

"This year has renewed respect for the magnitude and power of the polypropylene marketplace," he said. "When there's a disruption of this magnitude, you realize the market is bigger than any single customer or producer."

Blizzard estimated that the current PP supply/demand crunch "will take the rest of the year to sort out." He added that his firm's PP customers "are reassessing a myriad of supply chain issues and are reassessing their supplier portfolio."

"[Customers] are looking domestically and off-shore and looking at their specs. … They want to realign so if something like this happens again, they're prepared," Blizzard said.

Looking ahead, Blizzard added that PP processors might plan to keep more resin inventory on hand, and makers of finished PP products might do the same, especially with personal protective equipment used in the medical field.

Even the big run up in PP prices seen in 2020-21 might not lead to processors moving away from PP, according to Blizzard.

"I've been on both sides of it, and demand destruction or creation takes two to three years," he said. "You'll see little bits here and there, but it's a long process. People are afraid of jumping off a moving train."

Regional PS prices surged up 15 cents per pound in May, following a major increase in prices of benzene feedstock, which is used to make styrene monomer. PS prices had increased 9 cents in April and now are up an eye-popping 40 cents so far in 2021.

Benzene prices in May had ballooned to $4.60 per gallon, an increase of almost 53 percent from April. Contract prices for benzene for June already have settled at $4.08 per gallon — down 11 percent — indicating that PS resin prices for the month could be lower as well.

North American PS demand in 2021 "hasn't seen a normal seasonal pickup," according to Robin Chesshier, a market analyst with Resin Technology Inc. in Fort Worth, Texas.

"More restaurants and other places are opening up [after the pandemic], and that's affecting demand for takeout containers and other polystyrene products," she said. "Resin prices are also very high."

Chesshier added that PS resin operating rates in the region are under 70 percent, a level that she said was low for this time of year. Regional PS demand through April was up 11 percent vs. the same period in 2020, but last year's totals were exceptionally low because of the pandemic. Food packaging and food services account for more than half of North American PS sales.

Styrene supplies also had been somewhat tight but have recovered in most places, Chesshier said.