Some unexpected resin price increases in May, a rise in some exports

Three major commodity resins saw higher prices in North America in May, including one that did so unexpectedly.

After an extended battle, regional polyethylene resin makers were able to raise May prices by an average of 3 cents per pound. PE prices had been flat in April, as buyers held off a 6-cent hike that producers were pushing hard for. Prices had been up 4 cents in March after being flat for two consecutive months to start 2022.

Regional PE makers "got [the 3-cent increase] through sheer force of will," a resin distribution executive on the U.S. East Coast told Plastics News. "There's no reason for it right now.

"We might get that 3 cents back in June," the executive added. "There's plenty of [PE] material available and we're seeing a slowdown in consumer spending."

A resin buyer in the U.S. Midwest agreed, telling PN that the 3-cent May increase "was completely unwarranted."

"We're seeing some [sales] activity, but demand also is down in some places," the buyer said. "Customers don't want extra inventory."

PE makers now are working on increases of 3 cents for June and 5 cents for July. Regional PE supplies will be impacted this year by the startup of Shell Chemical's massive 3 billion pound capacity PE unit in Monaca, Pa. Market watchers said the site could be shipping commercial amounts of PE as soon as July.

A 5-cent polystyrene price hike for May also came as a bit of a surprise, since it was greater than the 2-cent increase seen in prices for benzene feedstock, which is used to make styrene monomer. PS prices had jumped a total of 18 cents from February through April.

Benzene prices for May closed at $4.11 per gallon, up less than half of 1 percent vs. April. Lower production from PS maker Americas Styrenics and an inability to source lower-priced imported PS have put upward pressure on PS prices.

Regional PET prices jumped up an average of 6 cents in May after surging a total of 29 cents in the first four months of the year. Strong seasonal demand played a role in the increase, as well as supply tightness and freight and logistics challenges.

PET demand typically increases in spring months, as beverage companies prepare for stronger demand brought on by warmer weather. Bottled water accounted for almost 25 percent of the U.S. beverage market last year, according to consulting firm Beverage Market Corp.

Polypropylene was the only commodity resin that saw lower prices in North America in May. PP prices were down an average of 7 cents per pound for the month. That decrease was a combination of a 10-cent drop in price for polymer-grade propylene (PGP) monomer feedstock, lessened by PP makers' ability to add 3 cents to their margins. PP makers had been attempting to gain 6 cents in margin.

"Barring weather events, this is the last hurrah," one resin distribution executive said of the PP market. "I doubt [PP makers] will get another increase in 2022."

On the PP supply front, Inter Pipeline Ltd.'s Heartland Petrochemical Complex recently brought 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 PVC prices were flat in May after climbing an average of 3 cents in April. Regional PVC prices now are up a net of 1 cent per pound since Jan. 1. PVC availability in the second half of 2022 could be affected by outages reported in June at feedstock plants operated by Westlake Corp. and Olin Corp. in Texas.

At a recent industry conference, Dow Inc. CEO Jim Fitterling said that U.S. PE exports have nearly recovered to pre-pandemic levels despite logistics and supply chain snags. He added that PE demand was growing at 1.3 to 1.5 times GDP and that domestic PE consumption is up 7-8 percent in the last year.

According to Fitterling, U.S. PE exports have reached about 35 percent of domestic production, which is near the 40 percent that was moving out in March 2020 before COVID shutdowns crunched demand and exports. The U.S. exported more than 13 billion pounds of PE in 2020, but that number fell to less than 11 billion pounds 2021, according to the U.S. International Trade Commission.

Exports of some materials continue to struggle, according to a recent report from data firm S&P Global. "A perfect storm of logistics logjams amid a crush of incoming containerized imports has squeezed U.S. resin exports just as supply availability is seen improving after a year of weather-related production setbacks," the report said.

Combined U.S. exports of PE, PP and PVC in 2021 were down 18.5 percent in 2021, according to USITC data.

In feedstocks, the ongoing Ukraine crisis has sent global oil and natural gas prices up since Russia invaded that nation in late February. West Texas Intermediate oil prices opened May at $104.70 per barrel and had climbed to $114.70 by the end of the month for an increase of almost 10 percent. Prices since that point have declined more than 4 percent to close at $109.60 on June 16.

Markets for natural gas — used as a feedstock to make PE and PVC — started May at $7.24 per million British thermal units but had jumped to $8.15, a hike of almost 13 percent, by the end of the month. As with oil, natural gas prices then declined, dropping almost 15 percent to close at $6.94 on June 16.