Most resins saw prices drop in December

Polymer Points is a monthly column by Frank Esposito that looks at the resin industry. For more insight into resin prices, sign up for our Polymer Point Live streams, exclusive for Plastics News subscribers.

December was warmer than expected in many parts of North America, but it was still a cold month for commodity resin prices in the region, with most materials seeing continued price drops.

Polypropylene prices declined by an average of 4 cents per pound for the month. That drop came from a 1-cent downward move for polymer-grade propylene feedstock and from buyers taking back 3 cents in margin, according to market sources contacted by Plastics News.

PP prices had dipped 2 cents in November and 15 cents in October. Overall, the December decline marked the seventh consecutive month that North American prices for the material had declined. Regional PP prices finished 2022 with a net decline of 42 cents.

In a recent update, PP supplier BlueClover LLC of New York commented on the recent PP market and the impact of new capacity from ExxonMobil Chemical and Heartland Polymers. "It appears the recipe for crashing PP prices is as follows: Mix together two new world-scale PP production units coming online in the same year with a heaping spoonful of consumer spending on experiences rather than durable items. Gently fold in multidecade high consumer price inflation for food and energy and bake in the oven at central bank raising interest rates degrees."

A 6-cent PVC drop for December partly was caused by ongoing softness in the construction market, which accounts for more than half of North American PVC sales. Residential construction in the U.S. has slowed as interest rates have increased. U.S. housing starts for November were down more than 11 percent vs. October and down more than 22 percent vs. the same month in 2021.

Regional PVC prices had been down 6 cents in November. The December drop was marked the sixth consecutive month that prices have fallen for that material. Regional PVC prices finished 2022 down a net of 31 cents.

Prices for both solid and expanded PS were down 3 cents in December, following a surprising 3-cent hike in November. Both of those moves were linked to price fluctuations for benzene feedstock, which is used to make styrene monomer.

Market prices for benzene were down 19 cents to $3.07 per gallon, a drop of almost 6 percent. Between February and December, PS prices were up a net of 19 cents. Food packaging and foodservice remained the largest end markets for PS in 2022.

Regional PET bottle resin prices were down a total of 6 cents in November and December, with buyers seeing combinations of 2-4 cents each month to reach the 6-cent total. That drop was tied to lower demand and increased availability of paraxylene and purified terephthalic acid feedstocks. Even with those declines, North American PET prices finished 2022 showing a net increase of 16 cents.

Strong seasonal demand for bottled water and other beverages played a role in earlier PET price increases, as well as a lack of new capacity and freight and logistics challenges. In July, 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 — said it would resume work on a major PET unit in Corpus Christi, Texas, with production set to begin in 2025.

Polyethylene prices in the region were flat for the third consecutive month in December. Producers have been 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.

Average selling prices for PE in the region had been down a total of 10 cents from July-September. Prices for all grades of PE are down a net of 2 cents so far in 2022.

Even with recent PE prices flat, the industry has been active. In November, Shell Chemical announced the start of production at its massive 3.5 billion-pound-capacity PE unit in Monaca, Pa., near Pittsburgh. It is 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.

Around the same time the Shell plant came online, Chevron Phillips Chemical Co. and QatarEnergy announced the formation of Golden Triangle Polymers Co. LLC, a JV that will spend $8.5 billion to build a petrochemicals complex in Orange, Texas. Construction will begin immediately on the project, with operations expected to begin in 2026. The complex will have two high density PE lines, each with annual capacity of 2.2 billion pounds, and an ethane cracker with annual capacity more than 4.5 billion pounds.

In the engineering resins market, higher-than-normal inventories at the processor level led North American prices down in the last four months of 2023. Since September, regional prices for polycarbonate are down an average of 11 cents per pound, according to sources contacted by PN. Prices in the region for nylon 6 are down an average of 12 cents per pound, with nylon 6/6 prices down 22 cents and ABS prices down 13 cents.

"People are still working out of inventory, but buyers are saying they had inventory and it's just getting to the point that inventory is depleted," one source said. "In the first quarter [of 2023], they'll be buying again at lower prices."

The automotive sector is a big end market for many engineering resins. The source said that auto production is expected to increase around 5 percent in the first quarter, which should boost demand for engineering resins. Demand from appliances and electrical/electronics — two other significant engineering resin markets — is expected to be down slightly in the quarter, the source added.

In feedstocks, oil and natural gas prices behaved differently in December. West Texas Intermediate oil prices opened the month at $80.55 per barrel and by the end of the month were mostly flat at $80.26.

Markets for natural gas — used as a feedstock to make PE and PVC — were more active, dropping significantly because of warmer-than-expected winter weather. Prices for that material started December at $6.93 per million British thermal units but plummeted more than 35 percent to $4.47 by the end of the month. Prices since then have continued to plunge another 31 percent to close at $3.07 on Jan. 25.