PN pricing chart sees June drops, nonmarket corrections

North American commodity resin prices saw drops again in June, plus Plastics News is showing significant nonmarket corrections for three materials.

The nonmarket corrections — for PET bottle resin, polypropylene and PVC — mostly reflect price rebates seen during renegotiations in late 2021 and 2022.

On the regular June changes, PN is showing price drops for polyethylene, PVC and polystyrene resins.

PE prices were down an average of 3 cents per pound for the month, according to market sources contacted by Plastics News. Prices had been flat for the previous two months. PE prices now are up a net of 3 cents so far in 2023.

"Spot [PE resin] prices have been softening for two months already, reacting to increasing inventory levels at the producer's side," said Esteban Sagel, principal with Chemical & Polymer Market Consultants in Houston. "It's only logical that, by now, [resin] contract prices should start reflecting that reality."

Hurricane season could play a role in PE markets, Sagel added, since "nobody wants to be caught with low inventories if a major hurricane hits the region, so producers are being cautious in providing incentives to shed inventories."

PE producers and buyers have been battling back and forth for much of 2023. Buyers were able to fight off a 5-cent price hike in April, while producers were able to stop an anticipated 3-cent drop in May. Concerns over lower demand amid economic uncertainty and over potential global oversupply of PE resin have been affecting decision-makers in the PE market.

Regional PVC prices declined an average of 2 cents in June. Prices also had been down 2 cents in May after being flat for two consecutive months. Prices for PVC now are down a net of 2 cents so far this year.

PVC demand remained soft in June, even as producers struggled with production issues. One market source told PN that U.S. and Canadian PVC production in May was running at less than 65 percent of nameplate capacity.

U.S. residential construction has slowed as interest rates have increased. That's affected PVC demand, since the construction market through pipe, siding and other products accounts for more than half of PVC demand. U.S. housing starts for May came in at an annualized rate of 1.49 million. That number was up almost 5 percent vs. April, but down almost 13 percent vs. the same month in 2022.

In the PS market, prices slid 3 cents in June after gaining 2 cents in May. Those moves were connected to fluctuations in price for benzene feedstock, which is used to make styrene monomer.

Benzene prices were down 36 cents to $3.55 per gallon in June. That represents a drop of more than 9 percent. North American benzene prices now are up a total of 48 cents so far in 2023.

"There's plenty of PS supply relative to current demand, so producers are probably being flexible on pricing," said David Barry, a market analyst with PetroChem Wire in Houston.

North American prices for polypropylene and PET bottle resin also are expected to decline in June, but the amount of those declines hasn't been finalized. Market analyst Phil Karig said that although not every resin type has the same underlying market dynamics, "just about all of them" are impacted by the direction of oil prices.

Oil prices "are very much dependent on current and forecast industrial production in the U.S. and globally," added Karig, principal with Mathelin Bay Associates in St. Louis.

Karig pointed out that in the last 12 months U.S. crude oil prices have trended down from more than $110 per barrel to less than $70. "Some resin buyers … may be sitting on the sidelines waiting for resin prices to fall," he added.

"In the current global environment, oil prices could have further to fall while total global demand will be fighting an uphill battle against higher interest rates. Not surprisingly, this is all spilling over into resin markets," he said.

In feedstocks, West Texas Intermediate oil prices opened June at $68.10 per barrel but had ticked up to $69.70 in late trading June 28, an increase of more than 2 percent. Markets for natural gas — used as a feedstock to make PE and PVC — have been lower than expected for much of 2023 because of warmer winter weather and high supply levels. Prices started June at $2.27 per million British thermal units but were up almost 22 percent to close at $2.76 on June 27.

Also this week, PN is showing downward nonmarket corrections on prices for PET bottle resin, PP and PVC.

PN is showing a 35-cent downward correction on PET and downward corrections of 20 cents each on PP and PVC. These moves are not intended to reflect recent market activity.