Turbulence in resin prices sees some rise, others fall

April had a little bit of everything in commodity resin pricing, with North American prices for two materials up, one down and two flat.

The battle for polyethylene pricing in April spilled over into May before producers were able to secure a 3-cent-per-pound increase. Regional PE prices had been flat for the previous two months and five of the previous six, with the exception of a 5-cent hike that took hold in January.

Buyer resistance to the April hike could mean that the increase will be a short-lived one, with prices dropping a similar amount in May or June, market sources said. Some suppliers also have a 3-cent increase on the table for May.

"Most suppliers have said the [April] increase could have or should have happened in February or March," a PE buyer in the Southeast U.S. said. "The fact that the market began to soften in April is where the dispute [on the increase] is coming into play a bit."

Market analyst Mike Burns said regional PE buyers "are very frustrated" with the April increase. "There's nothing out there to justify it," added Burns of Plastic Resin Market Advisors. "There's no driver based on cost, and the market is oversupplied."

The only potential reasoning behind the April hike was that U.S./Canadian PE sales for the month were the highest in two years, according to the American Chemistry Council. But PE inventories in the region remained relatively high in spite of the sales boost.

"Domestic demand remains fairly good, and exports are very strong," a PE buyer in the Midwest U.S. said. "Domestic inventories aren't short, but they're at a relatively low level, mainly due to exports."

Exports of PE resin from the U.S. and Canada reached an all-time high of 45 percent of total production in 2023. The export rate is slightly higher than that record level so far in 2024.

By comparison, exports accounted for 23-28 percent of North American PE production in 2015-18 and 33-39 percent of that amount in 2019-22. A considerable amount of PE capacity added in the last 10 years because of low-priced shale gas and oil has been intended for export markets.

North American PVC resin prices also ticked up 1 cent per pound in April 1, marking the third consecutive monthly price increase for that material. PVC prices in the region had increased 2 cents in March and 3 cents in February. Demand has increased as most of North America gears up for construction season.

In February, domestic PVC sales surpassed 900 million pounds for the first time since August 2022. One market source said that recent PVC resin production "showed no signs of turnaround activity impacting supply as inventory increased."

U.S. housing starts for March came in at an annual rate of 1.46 million, according to the U.S. Census Bureau. That number is down more than 4 percent vs. February, but up 1.5 percent vs. the same month in 2023. Construction activity accounts for about 60 percent of North American PVC demand.

Lower feedstock costs sent North American polypropylene resin prices tumbling an average of 10 cents per pound in April. That drop matched a price decline for polymer-grade propylene (PGP) feedstock. The April price drop for PP reversed a trend that had seen prices for the material increase for three consecutive months and six times in the previous seven months.

The previous three increases totaled 10 cents, so the April drop returns prices to where they were at the start of 2024. PGP supplies had been tight earlier in 2024 because of mechanical issues at production sites and the effects of a brief cold snap in Texas, where much of the PGP and PP production is located. But most of those units have returned to full production.

PP supplier BlueClover of New York said in a research report that "each week it seems that the seven-month bull market in PGP has broken and a bear market has established itself."

The report added the firm estimates that physical PGP pricing will continue to trend lower into May and June. "Supply for PGP has improved from the first quarter," officials added. They cited lower demand for PGP because of PP outages, slow domestic PP demand and low export volumes as reasons for the increase in PGP supply.

In a recent PP forecast, market analyst David Barry of PetroChem Wire in Houston said North American PP makers are expected to keep operating rates low, in line with demand forecasts, into 2024. Potential PP capacity additions for 2024 include more than 500 million pounds of additional production form Formosa Plastics Corp. USA in Point Comfort, Texas.

April prices were flat in North America for polystyrene and PET bottle resin. A slight increase in price for PS feedstock benzene in April wasn't enough to move PS prices, which had been up 5 cents in March after moving up 4 cents in February.

Prior to those two increases, PS prices had dropped for three straight months, with those declines totaling 9 cents. The 5-cent March hike followed a price increase for benzene, which surged almost 13 percent to $4.10 per gallon in March, an increase of 46 cents.

Regional PET bottle resin prices were flat in April after ticking up 2 cents in March. Prices for the material also had moved up 3 cents in February. The March increase was more connected to higher prices for feedstocks such as paraxylene and purified terephthalic acid (PTA), one source said.

Seasonal demand also played a factor in the March PET price hike, as retailers prepare for higher beverage sales during warmer summer months. Sales of bottled water, the largest beverage segment in the U.S. and a major consumer of PET, continues to grow but has slowed in recent years.

In feedstocks, regional prices for crude oil and natural gas moved in different directions in April. West Texas Intermediate oil prices opened the month at $83.20, but dipped almost 2 percent to $81.90 by the end of the month. From that point, prices have ticked down almost 5 percent more to $78.10 in early trading May 23.

Markets for natural gas — a feedstock to make PE and PVC — have seen recent surges as warmer temperatures increase demand for electricity used in air conditioning. Prices for the material started April at $1.76 per million British thermal units but jumped 13 percent to $1.99 by the end of the month. From that point, prices have continued to soar, closing at $2.84 on May 22, up 43 percent for the month to that point.

Domestic demand remains fairly good and exports are very strong,. Domestic inventories aren't short, but they're at a relatively low level, mainly due to exports."

PE buyer,

Midwest U.S.