Prices rise for most resins in February as PE takes unexpected break

North American commodity resin prices remained active in February, with four materials seeing higher prices — but polyethylene staying flat.

Polypropylene and polystyrene both rose 4 cents while PET bottle resin and PVC climbed 3 cents.

But North American polyethylene prices were flat in February after climbing 5 cents in January. Flat February pricing surprised some market watchers who had expected another 5-cent hike to take hold.

PE prices had been flat for the previous three months before the January increase. Sources said the January increase was boosted by production issues that hit the Gulf Coast after freezing weather in the middle of the month.

Ethylene and propylene units operated by Formosa Plastics Corp. USA in Point Comfort, Texas, were affected by the cold. Major PE makers now are seeking a 3-cent increase for March.

Market analyst Mike Burns with Plastic Resin Market Advisors said that producers' inability to push the January 5-cent hike through was "a last-minute concession." He added that the 3-cent increase attempt for February was "questionable [but] possible."

Polypropylene resin prices jumped 4 cents per pound in February as tightness in supplies of polymer-grade propylene (PGP) monomer sent the market up. PP prices had been up 3 cents in January. Prices now have been up in five of the last six months, with the exception of flat pricing in December.

Earlier in the year, Enterprise Products briefly shut down a PDH unit making PGP in Baytown, Texas. Ineos Olefins & Polyolefins also placed force majeure supply limits on PP resin made at its Chocolate Bayou plant in Alvin, Texas, because of mechanical issues. That site has annual production capacity of about 1 billion pounds of PP and almost 1 billion pounds of propylene capacity.

Recent upswings in PP pricing are at odds with demand for the material, which has been in decline. Officials with materials firm LyondellBasell in Houston previously said that financial results for their Olefins & Polyolefins–Americas unit were down 25 percent in the fourth quarter of 2023 vs. the previous quarter.

PP supplier Blue Clover of New York said in a research report that, based on market dynamics, it expects PGP prices to drop 12-15 cents per pound between March and May. If that takes place, then it most likely would lead PP resin prices to decline as well.

Blue Clover officials added that recent limited availability of high-end and low-end grades of copolymer PP "leads us … to wonder if PP producers have lowered operating rates even further to reduce the impact of high feedstock pricing."

Prices for PVC resins increased 3 cents per pound in February.

Prices had been flat in January after declining by 1 cent in both November and December. Some market watchers had expected higher prices in January since construction suppliers typically build their inventories early in the year, but those hikes arrived in February instead.

One industry source told Plastics News the February PVC price hike was the result of increased demand for the material, combined with higher prices for ethylene and chlorine feedstocks.

U.S. housing starts for February came in at an annual rate of 1.52 million, according to the U.S. Census Bureau. That number is up 2 percent vs. January and up almost 3 percent vs. the same month in 2023. Construction activity accounts for about 60 percent of North American PVC demand.

Polystyrene prices jumped up 4 cents in February after dropping 2 cents in January. The February hike ended a streak of three straight monthly price drops for the material. Those declines had totaled 9 cents for the three months.

The February hike followed a price increase for benzene, which is used to make styrene monomer. Benzene prices surged 14 percent to $3.64 per gallon in February, an increase of 45 cents.

In spite of the feedstock-related price increase, one market watcher told PN that regional PS demand in early 2024 is "looking lousy, as it has been for a while."

"[PS] just has a hard time competing against alternatives such as PP and PET, which have a better reputation in terms of recyclability," the source said.

PS pricing in early 2024 also could be affected by a temporary shutdown of styrene production at a plant operated by Americas Styrenics in St. James, La. The unit has annual production capacity of about 1.1 billion pounds.

PET bottle resin prices increased by an average of 3 cents per pound in February. Market watchers had been surprised when prices dropped 5 cents in January. The February increase was tied to a bump up in demand and tighter supplies of feedstocks.

PET demand was lower than expected in 2023, even during the warmer summer months. Bottled water — the largest beverage segment in the U.S. and a major consumer of PET — continues to grow but has slowed in recent years, according to a recent report from consulting firm Beverage Marketing Corp.

For recycled resins, post-consumer low density PE pellet prices increased in North America during the first quarter. Sources told PN recycled LDPE pellets have increased an average of 5 cents per pound.

"There's more demand for post-consumer, so the scrap has gone up and your costs have gone up a little bit, too," said a recycler from California. "Also, your energy costs have gone up, and trucking is still up there, so there's a lot of factors that go into it."

Prices for recycled LDPE had been decreasing during the second half of 2023. Sources now expect buyers to continue to see slightly higher prices throughout the rest of 2024.

In feedstocks, West Texas Intermediate oil prices opened February at $75.85 per barrel but climbed 3 percent to $78.30 by the end of the month. From that point, prices have bounced up another 3 percent to almost $80.80 on March 21.

Markets for natural gas, used as a feedstock to make PE and PVC, have plummeted in recent months. Prices for the material started February at $2.10 per million British thermal units, but high inventories sent prices swooning more than 11 percent to $1.86 by the end of the month. From that point, prices continued to tumble, reaching $1.70 on March 20, down almost 9 percent for the month to that point.