PET bottle resin prices take a tumble

PET bottle resin prices slid down in October, landing in negative territory for the year.

The 4-cent drop in October comes after prices were flat in September. Prices had been up a total of 4 cents in August. Market sources said the October price drop resulted from lower seasonal resin demand — as beverage consumption slows with cooler temperatures — and lower feedstock costs.

PET prices now are down a net of 1 cent so far in 2023. PET demand has been lower than expected in 2023, even during the warmer summer months.

The drop came in a month that saw a little bit of everything in North American commodity resin pricing with two other materials up and two flat according to sources contacted by Plastics News.

Polypropylene prices increased for the second consecutive month, following higher prices for polymer-grade propylene (PGP) feedstock. Prices for PP in the region closed up an average of 4 cents per pound for October. The September price hike had been 4.5 cents. Combined with previous increases and decreases, North American PP prices now are up a net of 12 cents per pound in 2023.

Pricing moves for PP again matched changes in price for PGP. Supplies of PGP tightened in September and stayed that way in October because of production outages at some propane dehydrogenation (PDH) units. Those include challenges at units operated in Texas by Shell Chemical and BASF/TotalEnergies. North American PP supplies also will be affected by Braskem America's recent decision to stop production on a resin line in Marcus Hook, Pa.

In a recent market report, PP supplier Blue Clover LLC of New York said that PGP prices "continue to climb higher on PDH issues, yet demand for PP is falling rapidly." Blue Clover also said that the regional PP market "is coming off a slightly reduced supply period where certain PP reactors were down. These are the primary reasons for the higher PP price offers out there today." But they added that PP demand from the buy side "remains very weak."

And although the huge Chinese PP market is improving, it still faces challenges, according to a research note from John Richardson with consulting firm ICIS of Houston. Through the first nine months of 2023, PP demand growth in China was up 2 percent — 1 point higher than it had been in the first eight months of the year.

The Chinese PP market remains oversupplied because China's growth was overestimated, Richardson said. "As recently as three years ago, when new projects had been sanctioned … chemicals demand in general in China was expected to grow by 6-8 percent per year. Now, 1-3 percent seems more likely."

In the polystyrene market, a major hike in benzene feedstock prices sent resin prices up in October. Prices for all grades of solid and expanded PS were up 6 cents per pound for the month. Prices had climbed up 3 cents in both August and September.

All three consecutive hikes are connected to fluctuations in price for benzene feedstock, which is used to make styrene monomer. Benzene prices surged 21 percent to $4.04 per gallon in October, a jump of 70 cents vs. September. A recent benzene market update from chemanalyst.com said that U.S. benzene prices "remain on the higher edge amidst inclined demand and limited [upstream] supply chain in the domestic market."

North American PS prices now are up a net of 8 cents per pound and benzene prices up 97 cents so far in 2023. Global PS markets have been dealing with oversupply and low demand growth for most of the year.

PE resin prices were flat in October after moving up 3 cents in both August and September. Counting those increases, prices now are up a net of 9 cents so far in 2023.

In an email to PN, market analyst David Barry said he believes the main driver of recent price increases has been export demand.

"PE suppliers have really upped their export game this year, and we're seeing that reflected in U.S. trade data," he added. "Overall domestic demand is still not robust."

Barry, who's with PetroChem Wire in Houston, also said that third-party export sales "have definitely slowed down … and a lot of buyers are anticipating a downward price correction for PE in the fourth quarter."

As recently as the mid-2000s, exports made up only about 20 percent of North American PE sales. Since that point, increased access to shale gas and oil feedstocks have allowed producers to add large amounts of capacity with an eye on the export market. Exports now account for more than 40 percent of North American PE sales.

North American prices for PVC were flat for the second consecutive month in October. Prices for the material had seen a 2-cent supply-related hike in August. Combining increases and decreases, prices for PVC now are flat so far this year.

U.S. housing starts for October came in at an annual rate of 1.49 million, according to the Census Bureau. That number is up more than 1 percent vs. September, but down more than 4 percent vs. the same month in 2022. Construction activity accounts for about 60 percent of North American PVC demand.

In feedstocks, West Texas Intermediate oil prices opened October at $90.80 per barrel but slumped almost 11 percent to $81 by the end of the month. From that point, prices declined another 5 percent to $77.10 in early trading Nov. 21. Markets for natural gas — used as a feedstock to make PE and PVC — started October at $2.93 per million British thermal units but surged more than 22 percent to $3.58 by the end of the month. But from that point, they declined again, falling almost 20 percent to $2.88 in early trading Nov. 21.