Prices rise for polyethylene, PET

North American polyethylene resin prices took a surprising upward swing in January, increasing by an average of 3 cents per pound.

Regional PET bottle resin prices also were up 2 cents for the month, according to market sources contacted by Plastics News.

The 3-cent PE 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.

Regional PE demand also had been down because processors had built larger-than-normal inventories after the COVID-19 pandemic, sources said. But typical supply-demand factors that lead to price movement weren't evident in January.

"Supply is meeting demand [for PE resin]," one market watcher told PN. "Inventories are low at the producer level because of record exports in December."

The source added that PE supplies in the region have been tightened somewhat, even if not to the level that normally would support a price increase. PE production operated in Texas by Chevron Phillips Chemical Co. was impacted by cold temperatures in late December, while PE production operated in that state by Ineos Olefins & Polyolefins experienced tornado damage in late January.

Average selling prices for PE had been down a total of 10 cents from July-September. Prices for all grades of PE were down a net of 2 cents for full-year 2022.

Even with sluggish demand, the industry has been active. In November, Shell Chemical announced the start of production at their massive 3.5 billion pound capacity PE unit in Monaca, Pa., near Pittsburgh. It's the first major PE manufacturing complex in the Northeastern U.S. and the first U.S. plant built outside of the Gulf Coast in at least 40 years.

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.

The impact of exports was also clear in December, as domestic PE sales and production each were down more than 10 percent vs. the prior month, while exports grew 7 percent.

PET bottle resin prices ticked up an average of 2 cents per pound in January as demand improved slightly. Prices also were impacted by markets for paraxylene and purified terephthalic acid (PTA) feedstocks.

Regional PET bottle resin 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.

Current North American PET resin demand “is sluggish,” according to Mark Kallman, a market analyst with Resin Technology Inc. in Fort Worth, Texas. “Downstream [PET] products are well stocked,” he added. “Everyone’s looking for [resin] demand to pick up. It’s OK, but not great.”

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.

Mexico was the largest source of U.S. PET imports in the first 11 months of 2022, accounting for just over 21 percent of the total. The next four largest sources in that period were Taiwan, Oman, South Korea and Vietnam.

North America isn't expected to see much new PET production capacity until 2025. That's when Corpus Christi Polymers LLC — a partnership among materials firms Indorama Ventures of Thailand, Far Eastern New Century of Taiwan and Alpek SAB de CV of Mexico — is expected to complete work on a much-delayed major PET unit in Corpus Christi, Texas. That plant will have annual production capacity of 2.4 billion pounds of PET and 2.9 billion pounds of PTA feedstock.