Some resin prices take a hike at the end of summer

August had a little bit of everything on the resin pricing front, with polyethylene, PET, PVC and polystyrene prices all showing surprising increases, but polypropylene and others showing drops.

North American PE resin prices surprised the market by increasing an average of 3 cents per pound in August. Regional PE prices had been flat in July after dropping 3 cents in June. Counting the August increase, regional PE prices are up a net of 6 cents so far in 2023.

Market watchers said that higher exports of PE from North America tightened domestic supplies of the material and allowed the August hike to take hold, even though PE demand in the region hasn't been strong this year.

"Exports had an effect on the market," market analyst Mike Burns said. He added that PE demand could improve in September as a result of seasonal trends in the packaging sector.

In an email to Plastics News, market analyst Howard Rappaport said domestic PE demand "is still underperforming, but there are some signs of improvement."

Regional PE supplies are being affected by Chevron Phillips Chemical Co.'s decision to place force majeure supply limits on high density PE resin made at one of the firm's plants in Orange, Texas. CP Chem made that move in late August after an equipment failure at the site. Nova Chemical's PE resin production also is being affected by ethylene operating issues at its sites in Ontario.

In a recent market update, research firm ICIS of Houston looked at major increases of U.S. PE exports to China in the first half of 2023. In that six-month period, the U.S. became China's largest source of imported linear low density PE, helping to keep the U.S. market balanced for that material.

Regional PE makers now are seeking increases of 3-5 cents per pound for September. Market sources were split on the chances of those hikes being successful.

North American prices for PET bottle resin, PVC and polystyrene resins also saw surprising increases in August.

North American PET bottle resin prices ticked up an average of 3 cents in August after moving up 1 cent in July. Prices for the material had dropped a total of 4 cents in May-June. The August increase was a result of higher feedstock costs. Regional PET prices are up a net of 2 cents so far in 2023.

PET demand has been lower than expected in 2023, even during the warmer summer months, which increase consumption of bottled water and carbonated soft drinks, two major PET end markets. First-quarter imports of PET into the U.S. totaled about 420 million pounds, down 25 percent vs. the same quarter in 2022, according to global trading firm Czarnikow in London. Those totals also were down in the last two quarters of 2022.

A 2-cent hike for PVC was supply-related, according to sources contacted by PN. Regional PVC prices had been flat in July after declining an average of 2 cents in both May and June. Prices for PVC now are flat so far this year.

"We'll see what the fall brings," one market source said. "Resin has been tighter all year than one would expect."

U.S. housing starts for July came in at a 1.44 million annual rate, according to the Census Bureau. That number is flat with July, but down 13 percent vs. the same month in 2022. Construction activity accounts for about 60 percent of North American PVC demand.

In the PS market, prices jumped 3 cents in August after being down 6 cents in July and 3 cents in June. The August hike was connected to fluctuations in price for benzene feedstock, which is used to make styrene monomer. Benzene prices were up 18 cents to $3.08 per gallon in July. That represents an increase of more than 6 percent vs. the previous month.

North American PS and benzene prices are essentially flat so far in 2023, with PS prices down a net of 1 cent per pound and benzene prices up 1 cent.

Global PS markets have been dealing with oversupply and low demand growth for most of the year.

While most commodity resin prices were climbing in August, prices for polypropylene and several engineering resins were heading in the other direction. North American PP resin prices ticked down an average of 1 cent per pound, following a slight decline in prices of polymer-grade propylene (PGP) feedstock.

The 1-cent August drop comes after regional PP prices had been flat in July after declining 4 cents in June and a total of 23 cents since April. Those declines also matched price drops seen for PGP feedstock. PP prices increased a total of 27 cents in the first three months of 2023.

In a recent market report, PP supplier BlueClover LLC of New York cited data from the American Chemistry Council that showed PP inventories have moved lower for two consecutive months because of stronger demand and larger PP export volumes. Days of supply of PP inventory also have tightened, dropping to 35 from a high of about 43 earlier this year.

"All of these signs point to a tighter PP market compared to what we have been used to in the April through June months," BlueClover officials said.

Engineering resin prices in the region also have seen slightly lower prices in recent months. Regional prices for nylon, polycarbonate and ABS resins all have seen small declines since July, according to market sources contacted by PN. Low demand growth from processors and full inventories at the producer level were cited as reasons for the declines.

Prices for each of those materials dropped 2 cents per pound total in July-August. Prices for nylon 6 resins had been down 10 cents in total in May-June, with nylon 6/6 prices down 13 cents in those two months. PC prices declined an average of 6 cents, and ABS prices slumped an average of 7 cents in May-June.

"It feels like the [engineering resins] market is bouncing on the bottom," according to a resin buyer in the Midwest U.S. "Demand is still down, but we're not seeing prices drop by nickels and dimes like we did earlier in the year."

Looking to the rest of 2023, the buyer said engineering resins could see more small price drops. "The hope is that the market bounces back in the first quarter of next year," the buyer added.

In recycled resin markets, North American prices for post-consumer low density PE pellets have declined throughout 2023. According to sources, prices have decreased an average of 6 cents during the past six months.

"[There are] superlow virgin resin prices and lack of commitment on the customers out there on pricing structures, but it's really affected by virgin resin and slow demand," said a film recycler from the southern U.S.

Prices are expected to stay the same throughout the rest of 2023, according to sources contacted by PN. Market sources are expecting a slight increase at the beginning of 2024.

In feedstocks, West Texas Intermediate oil prices opened August at $81.80 per barrel and had ticked up more than 2 percent to $83.60 by the end of the month. From that point, global production cuts sent prices up almost 10 percent to $91.70 in late trading Sept. 18. Markets for natural gas — used as a feedstock to make PE and PVC — started August at $2.63 per million British thermal units but increased more than 5 percent by the end of the month to close at $2.77.