Average selling prices for most commodity resins continued to fall in North America in December.
Polypropylene prices declined by an average of 4 cents per pound for the month, with PVC prices down 6 cents and polystyrene prices down 2 cents. 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.
Freezing temperatures on the U.S. Gulf Coast from Dec. 22-25 did not have much impact on resin production, since suppliers were able to prepare for the weather event. One exception was Pinnacle Polymers' billion-pound-capacity PP plant in Garyville, La., which is now operating under force majeure supply limits, market sources said. Pinnacle officials could not be reached for comment.
Ineos Olefins & Polymers USA was considering a similar move on its Gulf Coast PP and HDPE assets, but continued to operate normally, sources said. An Ineos spokesman declined to comment on production operations.
The PP price 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 Blue Clover LLC of New York commented on the recent PP market and the impact of new capacity from ExxonMobil Chemical and Heartland Polymers.
"Producers have lowered operating rates from [the upper 80s] in the first half of this year to [the mid 70s]," Blue Clover said. "Customers are looking to replace older resin purchases at higher costs with new material purchases at lower costs.
"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 multi-decade high consumer price inflation for food and energy and bake in the oven at central bank raising interest rates degrees." Blue Clover officials said.
They added that in spite of the new PP capacity, Blue Clover expects PP and PGP prices "to rally somewhat in January and February, but the overall market remains long heading into next year."
The 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 came in at an annualized rate of 1.34 million. That number was 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.
For both PP and PVC, buyers also reduced the amount of their recent purchases in order to work off higher-priced inventory that had been bought earlier in the year.
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.
Officials with PS maker Trinseo of Berwyn, Pa., said that in the third quarter, their PS business saw volume declines, particularly in building and construction and appliances, as customers destocked amid falling raw material prices.
The 6-cent PET price drop across November and December was tied to lower demand and increased availability of paraxylene and purified terephthalic acid (PTA) 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.