‘Cautious' purchasing decisions lead to lower resin prices in September
North American prices for polyethylene and polypropylene resins continued a downward path in September, joined by engineering-grade polymers polycarbonate, nylon 6, nylon 6/6 and ABS.
Average selling prices for PE in the region were down 3 cents for the month, with prices for PP down 8 cents, according to buyers contacted recently by Plastics News. Improving supplies, softening demand and feedstock trends were behind the price drops.
PE prices had declined by 4 cents in August and 3 cents in July. Prices for all grades of PE now are down a net of 2 cents so far in 2022.
PE giant Dow Inc. in late August announced plans to temporarily reduce global nameplate capacity for PE by approximately 15 percent. Other PE makers are believed to have reduced production as well.
One PE market watcher said that continued PE production cuts and increasing exports will be primary fourth-quarter market indicators.
"Suppliers are attempting to regain market price control with lower inventory availability, and that could firm prices," the source said.
In an email to PN, industry veteran Esteban Sagel said that "there's concern about where the economy is headed, and processors are being more cautious with their purchasing decisions." Sagel is principal of Chemical & Polymer Market Consultants in Houston.
Major PE makers now are attempting to raise prices by 7 cents in October after being unsuccessful with a 5-cent attempt in September.
PP prices in September tumbled 8 cents per pound as buyers benefited from a 3-cent price drop for polymer-grade propylene (PGP) and were able to take back 5 cents in margin as well. It's the fourth straight monthly drop for PP, after a 1-cent drop in August and a total drop of 17 cents in June and July.
Combined with other increases and decreases, PP prices now are down a net of 21 cents so far in 2022. Sagel said that with logistics costs sharply lower than earlier in the year, PP imports are most likely reaching North America.
"This should help close the gap between North American PP prices and the rest of the world," he added. "Low propylene prices certainly provide room for PP prices to fall."
Robin Chesshier, a market analyst with Resin Technology Inc. in Fort Worth, Texas, said that demand across PE, PP and other polymers "is suffering" and that more price drops for PE and PP are possible in October.
"There's plenty of resin and finished goods inventory," she added. "The global economy is putting pressure on these markets. I don't think people have taken the chance of a recession seriously enough."
Shell Polymers is in the process of starting up 3 billion pounds of PE capacity at a new complex near Pittsburgh. New PP supplier Heartland Polymers recently began production of homopolymer resin at a new plant in Strathcona County, Alberta. Heartland is expected to produce more than 1 billion pounds of PP annually.
In engineering resins, lower demand and improving supplies sent prices down in September for polycarbonate, ABS and nylons 6 and 6/6.
PC and nylon 6 each saw prices decline by 4 cents per pound, with ABS prices down 5 cents and nylon 6/6 prices down 6 cents, according to market sources.
An engineering resins market source said that, with the exception of film grades, the market now has "lots of inventory and availability" for nylon resins. The source added that ABS "saw the bottom of pricing this month and availability is stable" and that PC demand "is also balanced in the market."
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