PS resins buck trends with slight price drop as other materials climb

There were no lazy days of summer for polyethylene, polypropylene, PVC and PET bottle resin prices, all of which increased in North America in July.

But polystyrene fell 1 cent, driven by lower prices for benzene feedstock, which is used to make styrene monomer.

In the short term, regional PS supplies also have been affected by a production outage at a resin plant operated by Americas Styrenics in Joliet, Ill. The plant has been out of production since a tornado knocked out power in the area on July 15. The tornado touched down on an adjacent property only 400 yards away and destroyed electrical transmission towers, causing a widespread power outage.

The PE and PP hikes surprised some buyers. Prices for each material rose an average of 5 cents per pound in July, according to buyers and market watchers contacted by Plastics News. For both materials, supply concerns over brief outages caused by Hurricane Beryl, which hit the Houston area in early July, played a role in the price hikes. The hurricane brought heavy rains and 90 mph wind gusts to the Houston area beginning July 8.

PE prices had been flat for two straight months after a 3-cent increase took hold in April. Market analyst Mike Burns said the July increase could hold through October, as buyers remain concerned about more weather events.

"The long-term outlook does not foresee the sustainability of any of the new increases without an event," he added in a market report. "Feedstocks will not drive prices, as natural gas and ethane inventories remain ample and low cost."

North American PE demand is up 3-6 percent so far in 2024, according to Esteban Sagel, principal with Chemical & Polymer Market Consultants in Houston.

"The U.S. economy is on stronger footing than a year ago, and PE is a leading indicator of the direction of the economy," Sagel said.

Market sentiment is that PE makers are unlikely to achieve another 5-cent price increase in August unless there's some unforeseen supply event, according to David Barry, a market analyst with PetroChem Wire in Houston.

"The July [PE] price increase was implemented despite evidence of softening export demand," Barry added. "I think the production hit from Hurricane Beryl, plus a lot of pre-buying by downstream customers, was just enough to push the increase through."

Under normal market conditions, it's difficult to achieve higher prices in summer months, said Howard Rappaport, a market analyst with StoneX in New York. But he added that several factors — including new capacity from Baystar, Shell Chemical and Nova Chemicals — have allowed that to happen in 2024.

Exports of PE resin from the U.S. and Canada reached an all-time high of 45 percent of total production in 2023. The export rate was slightly higher at 46 percent in the first half of 2024. By comparison, exports accounted for 23-28 percent of North American PE production in 2015-18 and 33-39 percent of that amount in 2019-22.

The July 5-cent increase for PP marked the second straight monthly increase for that material, following a 2-cent rise in June. Those moves matched price changes seen for polymer-grade propylene (PGP) monomer feedstock.

Combined with previous increases and decreases, PP prices now are up a net of 5 cents so far in 2024.

Sagel at CPMC said production issues have fueled PP price increases in 2024. He added that higher transportation costs are keeping overseas imports from reaching natural markets for U.S. exports like Mexico and Latin America. Those regions typically provide U.S. producers with avenues to shed any excess product.

Those factors are keeping PP prices relatively high, Sagel added, even though domestic demand could be down by double-digit rates this year. PetroChem Wire's Barry said that normal production from PDH-type PGP units could increase monomer inventories and help balance the market in August.

North American PVC resin prices moved up an average of 1 cent per pound in July, in part because of weather-related production outages. A major PVC resin plant operated by Shintech Inc. in Freeport, Texas, was down for three days before restarting on July 11.

The recent drought in Mexico also has affected North American PVC production. Mexican officials said in early July that drought conditions had ended, but PVC maker Orbia lost several weeks of production at a major PVC resin and compounding plant in Altamira because of lack of water.

The July 1-cent price hike on PVC matches a similar increase seen in June. Prices for the material now have increased in five of the last six months for a total increase of 8 cents in that period. "Orders are strong, and production is tight," an industry source said of current PVC market conditions.

A slight improvement in U.S. housing starts also played a role in the July PVC resin hike. Housing starts for June came in at an annual rate of 1.45 million, according to the U.S. Census Bureau. That number was up almost 4 percent vs. May, but down almost 3 percent vs. the same month in 2023. Construction activity accounts for about 60 percent of North American PVC demand.

PET bottle resin prices also were up 1 cent per pound in July, marking the second straight month that they increased by that amount. The price hike followed higher prices for raw materials, including paraxylene and purified terephthalic acid, according to an industry source contacted by PN.

Higher seasonal demand for bottled water and carbonated soft drinks also played a role in the July increase. Combined with previous increases and decreases, prices for the material now are up 1 cent so far in 2024.

PN also has reported higher prices for recycled grades of low density PE and PET in mid-2024. Post-consumer LDPE pellets have increased on average 3.5 cents per pound. Clear post-consumer pellets increased by 4 cents, and colored post-consumer pellets increased by 3 cents.

"Demand is being driven by legislation for PCR [post-consumer] content," said a recycler in the West. "The increase in demand for PCR has people buying premium bales and driving the whole market up."

Sources expect recycled LDPE prices to either stay steady or increase by a couple of cents by the end of the year.

"Quite honestly, I could see it going up another 10 percent, which is about 2 to 3 cents," the source said.

For recycled PET, prices have increased by an average of 2.5 cents per pound. Clear post-consumer PET pellet prices are up 3 cents per pound, and green post-consumer pellets are up 2 cents.

"With temperatures on average being elevated, folks are certainly consuming more cold beverages. With that comes an obvious increased demand," said a manufacturer in New Hampshire. "But at the same time, you have the same supply."

Recycled PET prices have been rising since the second half of 2023.

In feedstocks, regional prices for crude oil and natural gas both were down in July. West Texas Intermediate oil prices opened the month at $81.50 but dropped more than 4 percent to $77.90 by the end of the month.

Markets for natural gas, used as a feedstock to make PE and PVC, started July at $2.60 per million British thermal units but fell 21.5 percent to $2.04 by the end of the month. From that point, prices have recovered to close at $2.22 on Aug. 14, an increase of almost 9 percent.