Commodity prices rise; engineering resins drop

The upward swing of commodity resin pricing continued in February, with higher prices reported for three materials.

North American polypropylene resins prices saw the biggest hike, jumping an average of 8 cents per pound. That increase reflected a 7-cent increase in prices for polymer-grade propylene (PGP) feedstock, with PP makers gaining 1 cent in margin improvement as well. PP prices had jumped up 11 cents in January, matching a similar move in PGP.

"Clearly the PGP market remains tight," officials with New York-based PP supplier Blue Clover LLC said in a market update. "There is a continued supply constraint issue with delayed downtime experienced by PDH production." Supplies of PGP in the region have been tightened by planned turnarounds at plants operated by Enterprise Products and Invista in Texas.

"It's a very unusual time [for a PP price increase] because there's a lot of inventory and demand hasn't been good," said Paul Pavlov, a market analyst with Resin Technology Inc. in Fort Worth, Texas. He added that spot prices for PGP "have been more volatile than expected, and that's affected polypropylene pricing."

The January and February PP price hikes are the first seen for the material after seven consecutive monthly price drops. PP prices were down 4 cents in December and down a net of 42 cents for full-year 2022.

PVC prices moved up an average of 1 cent per pound for the second consecutive month in February. Availability of PVC remained somewhat tight again, as construction industry buyers began to make purchases ahead of spring construction.

The January hike ended a streak of six consecutive monthly price drops for PVC, including a 6-cent decline in December. Regional PVC prices finished 2022 down a net of 31 cents. Residential construction in the U.S. has slowed as interest rates have increased.

U.S. housing starts for January came in at an annualized rate of just under 1.34 million. That number essentially was flat vs. December but down more than 27 percent vs. the same month in 2022.

Prices for both solid and expanded polystyrene were up 3 cents in February after being flat in January. The February price hike was linked to price fluctuations for benzene feedstock, which is used to make styrene monomer.

Market prices for benzene were up 47 cents in February to $3.58 per gallon, an increase of just over 15 percent. Prices for the material had been up 4 cents in January, but that amount wasn't enough to lift regional PS prices.

North American polyethylene and PET bottle resin prices both were flat in February. PE prices had taken a surprising upward swing in January, increasing by an average of 3 cents per pound. That hike came after prices had been flat for three consecutive months. Although demand was down in the second half of 2022, PE makers were able to hold prices flat by reducing production and increasing the amount exported from North America.

These moves were able to counteract drops in domestic demand caused by an economic slowdown. Prices for all grades of PE were down a net of 2 cents for full-year 2022. Regional PE demand also had been down because processors had built larger-than-normal inventories after the COVID-19 pandemic began, sources said.

Increased exports have absorbed new North American PE capacity in recent years. From 2019-21, almost 40 percent of the region's overall PE production was sold into export markets, with that amount reaching a record 21.1 billion pounds in 2022. By comparison, the export market share of North American PE sales averaged only 24 percent from 2015-18.

PET bottle resin prices were flat in February after climbing up 2 cents in January, as demand improved slightly. PET prices had been down a total of 6 cents in November and December. Even with those declines, North American PET prices finished 2022 showing a net increase of 16 cents. Strong seasonal demand for bottled water and other beverages played a role in lifting PET prices in 2022, as well as a lack of new capacity and freight and logistics challenges.

Against a backdrop of little or no new domestic capacity, U.S. imports of PET resin were up almost 13 percent in the first 11 months of 2022. Imports in that period totaled almost 3 billion pounds, according to U.S. Customs data cited by research firm PetroChem Wire of Houston.

Regional PET supplies will be affected by Alpek SAB de CV's recent decision to close its PET resin plant in Charleston, S.C. The site, known as Cooper River, was built in the early 1970s and has annual production capacity of about 375 million pounds.

Officials with Alpek in Monterrey, Mexico, said the site represents about 2 percent of the firm's total assets. According to state data, the plant employed 125. Alpek will transfer Cooper River's PET resin production to its other sites, enabling annual cost reductions of around $20 million and improvements in capacity utilization.

Alpek is a partner in Corpus Christi Polymers LLC, a joint venture that's building a major PET resin and feedstocks plant in Corpus Christi, Texas. After a lengthy hiatus, work on that site resumed in August.

Production is set to begin in 2025 at the plant, which will have annual production capacity of 2.4 billion pounds of PET and 2.9 billion pounds of purified terephthalic acid (PTA) feedstock. Officials have said the Corpus Christi site will be the largest vertically integrated PET-PTA production plant in the Americas. The JV was formed in 2018 following the $1.1 billion purchase of a partially constructed facility from M&G Group of Italy.

An Alpek spokesman said that the Corpus Christi project did not affect the firm's decision to close the Cooper River plant. That decision "was based on optimization of Alpek Polyester's current production assets," he said. In North America, Alpek owns and operates PET maker DAK Americas of Charlotte, N.C., as well as Mexican polypropylene maker Indelpro.

In engineering resins markets, sources told Plastics News that regional prices for nylon, polycarbonate and ABS resins all declined in the first quarter of 2023. Larger-than-normal inventories at the processor level and sluggish demand were cited as reasons for the price declines.

Regional prices for nylon 6 and 6/6 resins in the first quarter were down 6-9 cents per pound, on average, with PC prices down 4-5 cents and ABS down 5 cents, sources said. Additional price decreases of 2-6 cents per pound for these materials could be seen in the second quarter, sources said.

In feedstocks, oil prices ticked down slightly in February, while natural gas prices moved up a little. West Texas Intermediate oil prices opened the month at $78.90 per barrel but by the end of the month were down more than 2 percent to $77.05. That decline accelerated in March, with prices closing down almost another 10 percent to $69.50 on March 21.

Markets for natural gas, used as a feedstock to make PE and PVC, have been lower than expected because of warmer winter weather, but they managed to bump up slightly in February. Prices started the month at $2.68 per million British thermal units but had edged up almost 3 percent to $2.75 by the end of the month. But they declined from that point, sliding 14.5 percent to close at $2.35 on March 21.