PET bottle resin prices join PP, PVC in an early summer slump

PET bottle resin fell by an average of 2 cents per pound in May, becoming the third commodity resin to see a decrease in the month due to lower demand and feedstock costs.

Demand for PET bottle resin has been less than expected, even as warmer weather saw an increase in consumption of bottled water and carbonated soft drinks, two major PET end markets.

PET supplies also 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.

Polypropylene resin prices declined by an average of 8 cents per pound in May. The May price drop matched a drop seen in prices for polymer-grade propylene (PGP) feedstock. PP prices had been down 11 cents in April — again matching PGP — after increasing 8 cents in March and being up a total of 27 cents in the first three months of 2023.

First-quarter North American PP demand was down 8 percent vs. the same quarter in 2022. PGP prices "continue to get pushed down by oversupply of PP [resin] and, to a lesser degree, pulled down by propane pricing," officials with New York-based PP supplier Blue Clover LLC said in a market update. They added that they believe there's a 60 percent chance that PGP prices for June will be lower than those seen in May.

Blue Clover added that in the fourth quarter of 2022, North American PP makers "did a tremendous job of increasing PP exports and rationalizing operating rates to [less than] 70 percent." But in the first quarter of 2023, export volumes decreased because of "incredible" amounts of Chinese PP resin being exported to the world, while operating rates increased to 75-80 percent. This move, along with new capacity from ExxonMobil, "led to another supply overhang that the market is currently working through."

Regional PP prices now are down a net of 8 cents for 2023. North American PP supply was increased in mid-2022 when Heartland Polymers started production at a billion-pound-per-year capacity unit in Strathcona County, Alberta. PP maker Invista also plans to add 100 million pounds of specialty PP capacity through a debottlenecking in Longview, Texas, later this year.

PVC prices were down an average of 2 cents in May after being flat for two consecutive months. Prices had been up a total of 2 cents in the first two months of the year, so the May drop means that prices for the material are flat so far in 2023.

PVC demand remained soft in May, even as producers Formosa Plastics Corp. USA and Westlake Corp. struggled with production issues, according to market sources contacted by Plastics News.

Residential construction in the U.S. has slowed as interest rates have increased. That's affected PVC demand, since the construction market through pipe and other products accounts for more than half of PVC demand. U.S. housing starts for April came in at an annualized rate of 1.42 million. That number was roughly flat vs. March but down 21 percent vs. the same month in 2022.

Polystyrene was the only commodity resin to see higher prices in North America in May, gaining 2 cents after dropping 2 cents in April. The May increase was connected to higher prices for benzene feedstock, according to market sources contacted by Plastics News.

Market prices for benzene — which is used to make styrene monomer — were up 31 cents to $3.91 per gallon in May. That represents an increase of almost 9 percent. North American benzene prices now are up a total of 84 cents so far in 2023.

According to 2022 market data from the American Chemistry Council, North American PS sales were down 5.4 percent in 2022, with expanded PS sales down 1.5 percent. On the production side, PS was down 4.6 percent and EPS down 2.4 percent.

Polyethylene was the only commodity resin to see flat pricing in North America in May, but that didn't happen without a fight. PE makers and buyers battled back and forth for weeks, with a 3-cent price drop set to take hold, before prices settled flat for the month.

In a similar battle in April, PE buyers were able to prevent a 5-cent price hike from going through. Prices for all grades of high, low and linear low density PE had been up 3 cents in March, although that increase also was strongly resisted by buyers. PE prices are up a net of 6 cents so far in 2023.

In a recent research note, consulting firm Argus Media of London said that although many PE makers have announced increases of 3 cents for June contracts, buyers and some producers "have indicated that if demand remains as weak as it has been so far this year, it is more likely that prices will decline this month."

The report added that, in the U.S., polymers growth "has stagnated across the board, even as some sectors such as durables have been hit harder than others." It also said that, as consumer spending patterns have shifted, retailers "are struggling to manage inventories, which has left many U.S. plastic converters struggling to find their own correct inventory balance."

PN also recently showed corrections on prices for several recycled resins. Lower prices dating back to early 2022 in some cases are being shown. Although demand is increasing for many recycled grades, supply has been increasing at high levels as well.

Decreases per pound shown on the chart are: PET clear post-consumer pellets down 33 cents, PET clear post-consumer flake down 26 cents, LDPE film colored post-consumer pellets down 15 cents, LDPE film colored post-consumer flake down 14 cents, LLDPE stretch film pellets down 15 cents., PP industrial pellets down 43 cents, ABS mixed colors industrial pellets down 50 cents and PVC clear industrial flake down 21 cents.

Prices for some recycled HDPE resins were corrected upward to show higher prices resulting from demand outpacing supply. HDPE natural post-consumer pellets are up 23 cents, while HDPE mixed color post-consumer pellets are up 14 cents.

In feedstocks, West Texas Intermediate oil prices opened May at $76.80 per barrel but slumped to $68.10 by the end of the month, a drop of more than 11 percent. Prices have recovered somewhat from that point and closed near $72.50 on June 21, up more than 6 percent so far for the month.

Markets for natural gas — used as a feedstock to make PE and PVC — have been lower than expected for much of 2023 because of warmer winter weather and high supply levels. Prices fell again in May, starting the month at $2.41 per million British thermal units and ending at $2.27 for a decline of almost 6 percent. Prices began to recover from that point and closed on June 20 at $2.49, up almost 10 percent so far for the month.