Supplies recovered for some materials to start 2022, others remain turbulent

North American prices for polypropylene and suspension PVC resins fell in January, after PP and polyethylene prices also declined to close out 2021. Regional prices for PET bottle resin, however, saw a surprisingly large price hike in January.

PP prices were down 3 cents in January after slipping a total of 28 cents in November and December. Market sources said the January drop came from lower producer profit margins because prices for polymer-grade propylene feedstock surprisingly were flat for the month.

PP prices were down a total of 40 cents in the last four months of 2021 after seeing huge price hikes since early 2020.

"We're seeing customers have more [PP] inventory than they've had in the past," said Gerard Selvaggio, a partner at New York City-area PP distributor Blue Clover LLC Polymer Solutions. "Plus they're less concerned about supply being there because of weather issues."

Market sources said that although capacity utilization for North American PP was only around 80 percent in November, record levels of PP imports are affecting prices and supplies. Some of this material was ordered earlier in 2021 but didn't arrive until later because of shipping delays.

Even with the late-year declines, PP prices are up a net of 39.5 cents since December 2020. North American PP supplies will get a boost in 2022 when Inter Pipeline Ltd.'s Heartland Petrochemical Complex brings more than 1 billion pounds of new capacity online in Strathcona County, Alberta.

Regional suspension PVC prices also dipped 3 cents in January after being flat in December and taking a surprising 5-cent jump in November. Prices for the material increased 31.5 cents in 2021 and a net of 47 cents since January 2020.

A major reason for tight second-half supply conditions was the PVC sector's ongoing recovery from Hurricane Ida, which hit the Louisiana coast in late August. Major plants operated by Shintech Inc., Formosa Plastics Corp. USA and Westlake Chemical Corp. all were shut down for periods of time.

U.S. housing start activity slowed in late 2021. Construction activity is a main driver of PVC consumption. Units were started at a 1.52 million annual rate in October, according to the U.S. Census Bureau, down less than 1 percent vs. September and essentially flat when compared with October 2020.

North American PET prices surged upward 12 cents in January after being flat in December. That major hike was caused by severe supply tightness and higher feedstock costs as well as by freight and logistics challenges.

"Our balance is beyond tight right now," one PET supplier said.

As with PVC, the impact of Hurricane Ida has been seen in PET. A resin plant operated by DAK Americas in Bay St. Louis, Miss., lost some production after the storm, tightening supplies in an already tight market. PET prices were up 26 cents in 2021.

Average selling prices for PE slid 5 cents per pound in December. That marked the third consecutive 5-cent drop seen in the PE market. The October drop was the first seen in 17 months, as prices had jumped starting in early 2020 when pandemic-related demand couldn't be met because of weather-related production outages.

"Demand is still strong [for PE], but some of it is a backlog from buyers who were holding off while waiting for lower prices," one resin distribution executive told PN. Although PE prices dropped 15 cents in late 2021, the market finished the year up a net of 28 cents, according to the PN resin pricing chart.

More PE capacity for the region recently came online when Gulf Coast Growth Ventures started production at two new PE resin units in Corpus Christi, Texas. GCGV is a 50-50 joint venture between ExxonMobil Corp. of Irving, Texas, and Saudi Basic Industries Corp. of Riyadh, Saudi Arabia. The GCGV facility will make resin used in packaging, agricultural film, construction materials and clothing. The operation includes two PE units with combined annual production capacity of almost 3 billion pounds.

Shell Polymers also plans to open a major PE resin unit near Pittsburgh. That location will have annual production capacity of more than 3 billion pounds and is expected to come online during the first quarter. Shell officials have said they expect most of that material to be sold within North America.

Regional PS prices were flat for the fourth consecutive month in December, even as prices for benzene feedstock moved up slightly. Benzene came in at $3.28 per gallon for December, up 8 cents, or 2.5 percent, vs. November. North American PS prices were up a net of 30 cents in 2021.

In feedstocks, West Texas Intermediate oil began December at $66.18 per barrel but surged almost 14 percent to $75.21 by the end of the month. After major runups, prices for natural gas — used in North America as a feedstock for PE and PVC — fell more than 18 percent during December to close the month at $3.73 per million British thermal units.