Improving supplies, softening demand hit resin pricing in September
Improving supplies, softening demand and feedstock trends were behind the price drops. Average selling prices for polyethylene in the region were down 3 cents for the month. PE prices had declined by 4 cents in August and 3 cents in July. Prices for all grades of PE now are down a net of 2 cents so far in 2022.
PE giant Dow Inc. in late August announced plans to temporarily reduce global nameplate capacity for PE by approximately 15 percent. Other PE makers are believed to have reduced production as well.
One PE market watcher said that continued PE production cuts and increasing exports will be primary fourth-quarter market indicators. "Suppliers are attempting to regain market price control with lower inventory availability, and that could firm prices," the source said.
In an email to PN, industry veteran Esteban Sagel said "there's concern about where the economy is headed, and processors are being more cautious with their purchasing decisions." Sagel is principal of Chemical & Polymer Market Consultants in Houston. Major PE makers now are attempting to raise prices by 7 cents in October.
PP prices in September tumbled 8 cents per pound as buyers benefited from a 3-cent price drop for polymer-grade propylene (PGP) and were able to take back 5 cents in margin as well. It's the fourth straight monthly drop for PP, after a 1-cent drop in August and a total drop of 17 cents in June and July.
Combined with other increases and decreases, PP prices now are down a net of 21 cents so far in 2022. Sagel said that with logistics costs sharply lower than earlier in the year, PP imports are most likely reaching North America.
Robin Chesshier, a market analyst with Resin Technology Inc. in Fort Worth, Texas, said demand across PE, PP and other polymers "is suffering" and more price drops for PE and PP are possible in October.
Shell Polymers is in the process of starting up 3 billion pounds of PE capacity at a new complex near Pittsburgh. New PP supplier Heartland Polymers recently began production of homopolymer resin at a new plant in Strathcona County, Alberta. Heartland is expected to produce more than 1 billion pounds of PP annually.
In a recent research report, consulting firm C-MACC of Houston said that although most U.S. resin prices "have reset to historical levels relative to Asia, we foresee downward pressure on most in the fourth quarter of 2022."
For PP, the C-MACC report said "given high prices and still lofty relative PP-to-feedstock spreads, U.S. producers appear to [have] not pulled back production alongside the startup of [Heartland]."
"This has resulted in domestic [PP] inventories rising and … more new capacity is coming in the near term" from ExxonMobil Chemical, the firm added. The report also said that "a significant portion of the PP market targets durable goods, which could see a demand pullback amid falling consumer affordability."
Regional prices for polystyrene, PVC and PET bottle resin also continued their declines in September. Prices for both solid and expanded PS fell 10 cents, following another major price drop for benzene feedstock, which is used to make styrene monomer. PS prices had fallen 25 cents in August after a similar benzene move.
Contract benzene prices for September closed at $3.17 per gallon, a plunge of 30 percent vs. August. Even with the August and September PS drops, prices for the material are up a net of 22 cents since February.
Lower U.S. gasoline prices in recent months have caused benzene prices to decline. Benzene is added to gas to increase its octane rating, which can improve engine performance.
Regional PVC prices were down 5 cents in September, matching similar drops seen in July and August. Regional PVC prices now are down a net of 14 cents since Jan. 1.
Construction activity is a main driver of PVC consumption. U.S. housing starts in August came in at an annual rate of 1.52 million, down 10 percent vs. July and down 14 percent vs. the same month in 2021. This trend is an indicator that PVC demand is leveling off.
PET bottle resin slumped 3 cents in September after sliding a total of 21 cents in July and August. Even with these recent drops, PET prices are up a net of 24 cents so far in 2022. According to market sources, the September PET price decline was the result of a price decrease for paraxylene (PX) feedstock, combined with lower demand and higher inventories of PET.
Strong seasonal demand for bottled water and other beverages had played a role in earlier PET price increases, as well as a lack of new capacity and freight and logistics challenges. Higher gasoline demand had lifted prices for PX, which also is used as a gasoline additive.
In engineering resins, lower demand and improving supplies sent prices down in September for polycarbonate, ABS and nylons 6 and 6/6. PC and nylon 6 each saw prices decline by 4 cents per pound, with ABS prices down 5 cents and nylon 6/6 prices down 6 cents, according to market sources.
An engineering resins market source said, with the exception of film grades, the market now has "lots of inventory and availability" for nylon resins. The source added that ABS "saw the bottom of pricing this month and availability is stable" and that PC demand "is also balanced in the market."
In feedstocks, oil and natural gas prices continued their wandering ways in September and beyond. West Texas Intermediate oil prices opened the month at $89.55 per barrel but dropped to $79.50 by the end of the month for a decline of just over 11 percent. Prices since that point have rebounded up almost 15 percent to close at $91.10 on Oct. 10.
Markets for natural gas, used as a feedstock to make PE and PVC, started September at $9.13 per million British thermal units but plummeted almost 26 percent to $6.77 by the end of the month. Prices have continued to slide from that point, closing down almost 5 percent at $6.44 on Oct. 10.
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