North American polypropylene resin prices took a major leap in January, propelled by higher prices for polymer-grade propylene feedstock.
PP prices in the region surged 11 cents per pound for the month, matching an increase seen for PGP. North American PVC resin prices saw a much-smaller 1-cent increase for the month.
Supplies of PGP in the region were tightened by planned turnarounds at plants operated by Enterprise Products and Invista in Texas, as well as from reduced propylene output from oil refineries impacted by freezing weather that hit the Gulf Coast in late December.
"This [increase] was definitely supply-driven, although that's now expected to reduce somewhat," said David Barry, a market analyst with PetroChem Wire in Houston. Enterprise has completed its turnaround, he added, while Invista is expected to complete its by the end of February.
The PP price hike is the first seen for the material after seven consecutive monthly price drops. Regional PP prices were down 4 cents in December and down a net of 42 cents for full-year 2022.
Esteban Sagel, principal at Chemical and Polymer Consultants in Houston, said that since the PGP situation is "a supply constraint," he doesn't believe that the higher prices will be "a durable increase." Spot prices for PGP already were in decline by late January.
LyondellBasell Industries and other PP makers now are attempting to raise prices 6 cents in February. Some PP makers had 3 cent hikes on the table for January, but those were eclipsed by the PGP price move.
Although PP demand isn't strong at present, brief shutdowns experienced by Ineos Olefins & Polymers and by Braskem America in late January due to storms could have an impact on supplies. Production at Pinnacle Polymers' PP site in Garyville, La., also was affected by the late December freeze.
"PP supply remains tight as we head into February," officials with New York-based supplier Blue Clover LLC said in a market update. "Polypropylene producers were cutting inventory rates for several months, and that was before the January price rally in PGP. There's simply not a lot of excess PP material out in the market at this moment.
"Producers realize there's less product, and while domestic demand may be subdued compared to the first half of 2022, it hasn't fallen off a cliff," they added.
Even if PP demand is better than expected at present, it's "still not great," according to Barry at PCW. "A lot of polypropylene goes into manufacturing of durable goods, and the manufacturing economy seems to be in a recession," he added.
The 1-cent PVC hike came as supplies of the material tightened slightly, with construction industry buyers beginning to make purchases ahead of spring construction. The hike also ends a streak of six consecutive monthly price drops for PVC, including a 6-cent decline in December.
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 December came in at an annualized rate of 1.33 million. That number was down 1.5 percent vs. November and down almost 30 percent vs. the same month in 2021.
In other pricing areas, Plastics News is planning to show a 22-cent downward non-market correction for all grades of high, low and linear low density polyethylene on Feb.13. That correction reflects price rebates or discounts seen in negotiations between buyers and sellers in late 2022.
In some cases, these rebates or discounts were seen in late 2021. The correction does not reflect month-to-month price changes caused by supply, demand or feedstock prices in the current PE market.