Commodity resin prices cool off in October

Temperatures, leaves and commodity resin prices all fell in North America in October.

Regional prices for all grades of polyethylene were down an average of 3 cents per pound for the month. Drivers for that decrease were sagging demand and rising inventory levels. Market sources said PE production was flat for October even as inventories swelled by 235 million pounds. That brought the amount PE inventories have increased in the last three months to 750 million pounds.

PE buyers had been looking for price drops in August and September, but resin makers were able to keep prices flat. Based on previous price moves, regional PE prices are up an average of 10 cents per pound so far in 2024.

Exports of PE resin from the U.S. and Canada reached an all-time high of 44.7 percent of total production in 2023. The export rate was slightly higher at 45.4 percent in the first ten months of 2024.

There's some concern among PE market watchers that tariffs on imports proposed by the incoming Trump administration could impact U.S. PE exports by leading other countries to place retaliatory tariffs on U.S. exports, including PE resin.

Average selling prices for polypropylene were down an average of 6 cents in October, resulting from lower feedstock prices and a decline in domestic demand. Regional PP prices had been down 4 cents in September after increasing by 2 cents in August. The October PP drop, just as in September, followed a similar drop in price for polymer grade propylene monomer feedstock.

In a recent market report, PP supplier Blue Clover of New York said that current PGP supplies "are ample and [PP] continues to work down inventories in a sluggish demand market."

The report added that domestic PP demand for September was down 12 percent vs. August. PP days of supply "are the highest they've been this year so far," officials said. Combined with previous increases and decreases, regional PP prices now are down a net of 3 cents so far in 2024.

In spite of prices for both PP and PGP dropping a total of 10 cents in two months, Blue Clover said there are "some bullish signals" for both materials, such as possible year-end buying from processors to take advantage of low prices. PP and PGP markets also could benefit from PP makers lowering operating rates to take excess inventory out of the market.

Longer-term, North American PP consumers "have been caught in a tough spot for years," according to a recent report from Esteban Sagel, principal of Chemical & Polymer Market Consultants in Houston. Appropriately, the report was titled "Between a Rock and a Hard Place."

"Over the past decade and a half, [PP consumers] have dealt with stubbornly high prices compared to other regions and polymers, erratic supply, and severe market volatility," Sagel said. "No matter how you cut it, PP in North America is exorbitantly expensive."

North American PP resin also has become more expensive than competing materials, Sagel said. August PP contract prices were 13 cents higher than those of high density PE.

One solution to this challenge, according to Sagel, would be importing PP resin from overseas. But he added the logistics of doing so are more complicated than they appear, since PP in North America is largely consumed in bulk and transported via rail, while imports are typically traded in 25 kilogram bags or supersacks.

But U.S. PP consumers "have found ways to navigate these hurdles." The U.S. imported a record amount of PP resin in 2021, although numbers are down from that point.

In spite of these challenges — and as a result of ongoing high prices for domestic PP — Sagel said "it's time [for North American processors] to explore importing PP from overseas. It's the only viable strategy to stay competitive against both imported finished goods and alternative materials."

PVC prices dipped an average of 1 cent per pound in October after being flat in September. Prices for the material had dropped 2 cents per pound in August. A PVC market source told Plastics News that conditions have been unpredictable in recent months.

"Some days [PVC buyers] have good days, and some days sales are really slow. … I'm not sure what the future holds." The source added that recent PVC inventory supply numbers have reached 17 days, a level that the source said "is higher than it's been in a long time."

U.S. housing starts declined in September, coming in at an annual rate of 1.43 million, according to the U.S. Census Bureau. That number was down almost 3 percent vs. August, and down more than 5 percent vs. the same month in 2023.

Construction activity accounts for about 60 percent of North American PVC demand. Combined with previous increases and decreases, regional PVC prices now are up a net of 5 cents so far in 2024.

Polystyrene prices declined an average of 3 cents per pound in October after being flat for the previous two months and five times in the last six months. The only month that saw price movement in that time period was July, when prices fell 1 cent.

Prices for benzene — a feedstock used to make styrene monomer — dropped 48 cents in October to $3.13 per gallon, a decline of more than 13 percent. Benzene prices had slumped a total of 38 cents from July to September, but PS makers were able to limit price drops for their material to 1 cent in that period.

In the PET market, prices fell 4 cents in October after declining 3 cents in September and 2 cents in August. Prior to these declines, prices for the materials had been up 1 cent in both June and July. The October price drop followed lower prices for raw materials, including paraxylene and purified terephthalic acid.

Combined with previous increases and decreases, PET prices now are down a net of 8 cents so far in 2024. PET demand in North America has been in decline since August. Seasonal demand for bottled water and carbonated soft drinks often influence North American PET prices. Demand from those markets typically declines when weather cools in most of the region later in the year.

In feedstocks, regional prices for crude oil moved up slightly in October, while prices for natural gas declined. West Texas Intermediate oil prices opened the month at $68.20 but ticked up almost 2 percent to $69.30 by the end of the month. They've edged up a tick from that point, up almost 1 percent to $69.90 in early trading Nov. 21.

Markets for natural gas — used as a feedstock to make PE and PVC — started October at $2.92 per million British thermal units, but slid down more than 7 percent to $2.71 by the end of the month. From that point, colder temperatures led prices to surge almost 18 percent to close at $3.19 on Nov. 20.