Resin prices slide for PP, PET

North American prices for polypropylene and PET bottle resin both declined in June, as demand continued to wobble.

Regional PP prices fell by an average of 4 cents per pound in June, matching a price drop seen for polymer-grade propylene (PGP) feedstock. PP prices had been down 8 cents in May and 11 cents in April — again matching PGP — after rising a total of 27 cents in the first three months of 2023.

"Spot and contract PP have both shown significant decreases in the last two months," said Esteban Sagel, principals with Chemical & Polymer Market Consultants in Houston. He added that some PP production issues and higher spot PGP activity likely prevented contract PP prices from going lower in June.

PP makers that aren't integrated into a PDH unit or a steam cracker "need to push the pricing of PP higher or pullback on PGP buying at these price levels," officials with New York-based PP supplier Blue Clover LLC said in a market update. They added that because of the current market situation, recent PP operating rates have been around 75 percent.

"While domestic demand for PP has improved from previous months … it seems to be more a function of buyers not wanting to miss out at these price points than a need for material because of strong consumer demand into big box retailers," Blue Clover added.

Regional PP prices now are down a net of 4 cents for 2023. North American PP supply increased in mid-2022 when Heartland Polymers started production at a billion-pound-capacity unit in Strathcona County, Alberta. PP maker Invista also plans to add 100 million pounds of specialty PP capacity through a debottlenecking in Longview, Texas, later this year.

North American PET bottle resin prices declined an average of 2 cents per pound in June after being down by that same amount in May. Prices had ticked up 1 cent in April because of higher feedstock costs. Regional PET prices now are down a net of 1 cent so far in 2023.

Demand for the material has been less than expected, even as warmer weather increases consumption of bottled water and carbonated soft drinks, two major PET end markets.

Regional PET supplies will be affected by Alpek SAB de CV's recent decision to close its PET resin plant in Charleston, S.C. The site known as Cooper River was built in the early 1970s, and has annual production capacity of about 375 million pounds.

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 a recent report from market analyst Gareth Lamb with global trading firm Czarnikow in London. Lamb said that those totals have been down for three consecutive quarters as demand has weakened.

"Macroeconomic concerns, including persistently high inflation and increased interest rates, have meant most [PET] buyers have destocked, running on minimal inventories," he added.

U.S. PET makers exported almost 30 million pounds of material in the first quarter, Lamb said, with about three-quarters of that amount going to Canada and Mexico. That total was up almost 40 percent vs. the same quarter in 2022.

Globally, the PET market will be affected by massive capacity expansions in China. Lamb said China added almost 4.1 billion pounds of PET production capacity in the second quarter. In spite of a weak market environment, that country is scheduled to add around 4.7 billion more pounds in the second half of the year.

"Some older [Chinese PET] lines are expected to be retired," Lamb added. "Competition will undoubtedly intensify through the remainder of the year. Both operating rates and margins will face increased pressure."