Tight supplies and the Texas ice storm sent North American prices for most commodity resins up in February, including a monumental price increase for polypropylene.
Beginning Feb. 14, cold weather spread across Texas, including its Gulf Coast, where much U.S. resin production is located. Plants were closed in advance of the cold snap, but some operations were damaged as freezing temperatures caused pipes to expand.
As of Feb. 25, many commodity resin makers on the coast still were assessing their ability to restart production. Commodity resin markets — especially polyethylene, polypropylene and PVC — already were tight before the cold snap and have been further tightened by the outages.
PP prices catapulted up by 34 cents per pound in February. That's believed to be a record single-month hike for that material. PP prices already had been up a combined 27 cents in December and January. These major spikes have led some processors to issue price surcharges on PP finished products.
Most production of resin and related materials was down early Feb. 19, with several producers declaring force majeure or otherwise limiting sales through allocations. The previous day, research firm ICIS of Houston estimated that almost 90 percent of U.S. PP resin production was offline.
The firm also placed outages for linear low density PE at 54 percent, LDPE at 51 percent, high density PE at 42 percent and PVC at 16 percent. In feedstocks, ICIS estimated 65 percent of U.S. ethylene production was down, as well as almost 50 percent of propylene and 23 percent of vinyl chloride monomer.
The PP market is facing unprecedented shortages. Supplies already were tight before the Texas ice storm because of limited supplies of propylene.
"We're hearing that some of these [PP] plants could be up and running by the end of [February], but some of these shortages could last another two months," said Marc Fern, executive vice president with resin distributor M. Holland Co. in Northbrook, Ill.
Fern added that the lack of available PP resin could lead some processors to close plants or production lines temporarily if they can't get enough material. "Without propylene, [resin makers] can't make resin, and converters can't make their products," he said.
Prices for all grades of PE resin surged 7 cents per pound in February, following 5-cent hikes in both December and January. Those hikes were caused by strong demand — especially in products sold to grocery stores — and unplanned outages at some production sites.
PE supplies also are expected to tighten. On a Plastics News webinar Feb. 16, market analyst Mike Burns of Resin Technology Inc. said that "there are a lot of gray areas, but it's not looking positive right now."
Even before the Texas cold snap, the PE market was being impacted by lower production at a major plant operated in Mexico by Braskem Idesa. That plant now is in the process of restarting.
Major PE makers are seeking a 7-cent price increase effective March 1. North American PE prices are up a net of 32 cents since January 2020.
Prices for suspension PVC moved up 3 cents per pound in February after increasing 4 cents per pound in January. Demand is up, as processors that sell products into the building and construction markets look to build inventories.
North American PVC prices now are up a net of 22.5 cents per pound since January 2020. Construction-related uses, including plastic pipe, account for around 60 percent of annual PVC sales in the U.S. and Canada.
In solid PS, prices moved up 2 cents per pound after rising 5 cents in January and a total of 8 cents in November and December. The February increase came as a bit of a surprise, since prices for benzene feedstock, which is used to make styrene monomer, were down 5 cents to $2.43 per gallon for the month.
PS prices since January 2020 now are up a net of 19 cents. Markets for the material were affected in the second half of 2020 by the temporary shutdown of almost 600 million pounds of styrene capacity operated by Westlake Chemical Corp. in Lake Charles, La.
Prices for PET bottle resin moved up an average of 3 cents per pound in February after increasing the same amount in January. Beverage suppliers are building inventories of the material in advance of higher consumption during warmer summer months.
Market sources said that although production of PET bottle resin itself wasn't much affected by the cold snap, some plants that make feedstocks needed to make the resin are down.
PET prices showed a net decline of 1.5 cents per pound for full-year 2020. Bottled water has been the largest beverage market in the U.S. since 2016, when it surpassed carbonated soft drinks, according to the Beverage Marketing Corp.
In feedstocks, February prices also were affected by the Texas ice storm. West Texas Intermediate oil began February at $52.20 per barrel but had surged to $61.50 by the end of the month for a jump of almost 18 percent.
Prices for natural gas, used as a feedstock in North American PE and PVC, began February at $2.56 per million British thermal units and reached as high as $3.21 before finishing the month at $2.77, an increase of more than 8 percent.