Weak Demand Softens Prices
Although a number of resins saw price increases in January, weak domestic markets hurt suppliers’ prospects to implement hikes in February and March.
Last PE Hike For A While?
Polyethylene prices moved up 3¢/lb in January, and suppliers were aiming to push through 3¢ more last month. Moreover, a new 5¢/lb hike had been announced for Feb. 1. Still, the London Metal Exchange (LME) North American futures contract for March in blown film butene LLDPE was 65.7¢/lb, up from February’s 64.7¢.
Contributing factors: High energy costs and strong export sales in December and January helped resin suppliers implement half of their intended 6¢/lb price hike. This was despite lackluster domestic demand, particularly in the film arena. Says Mike Burns, global business manager for PE at resin purchasing consultant Resin Technology, Inc. (RTI), Forth Worth, Texas, “While the resin producers are feeling downward pricing pressure from the domestic side, the PE market is currently being driven by energy costs and global demand. One wild card is whether exports to China rebound following the Chinese New Year. The other is energy prices.” He and other industry sources have some doubts that the remaining 3¢/lb from the January hike will go through, and they expect the February 5¢ hike to fail.
January ethylene monomer contract prices stayed flat at 61.5¢/lb, despite attempted increases. Ethylene spot prices dropped below 50¢/lb, the lowest since last September.
PP Prices Flat
Polypropylene prices were flat last month, after moving up 1¢ to 2¢/lb in January. Suppliers have been unable to implement 9¢ worth of outstanding hikes from December and January. An additional increase of 2¢/lb for Feb. 1 was initiated by Basell but did not gain industrywide support. However, the LME’s March futures contract for g-p injection-grade homopolymer sold at 68.4¢/lb, up from February’s 67.8¢.
Contributing factors: Demand slumped in January and February, and industry sources saw no improvement coming in the short term. Export demand also has not rebounded to last year’s high levels, except from South America. Resin suppliers’ plant operating rates have dropped into the 80% to 85% range and their inventory build-up is nearing 40 days.
Propylene monomer prices rose only 0.5¢/lb in January, out of the 3¢ to 4¢ originally sought. Spot prices had been dropping, and Newell and other industry sources expected February contracts to fall another 2¢ to 3¢.
March PS Hike Posted
Dow broke ranks with other polystyrene suppliers and lowered its Feb. 1 increase from 4¢ to 2¢/lb. Then Chevron, Total, and Ineos Nova all issued a 5¢ increase for March 1 (2¢ of it representing a TVA from February’s hike), but Dow announced only a 3¢ hike.
EPS producers all supported a price hike for March 1, the first in months. Flint Hills (formerly Huntsman) and BASF posted for 3¢, Nova wants 4¢.
Contributing factors: PS demand was only moderate in February, and the price hikes were feedstock-driven. Contract benzene for February was $3.54/gal and spot prices were around $3.80.
PET Prices Flat For Now
PET resin tabs have remained flat since December, but a price increase could be coming next month, spurred by the usual seasonal upswing in demand.
Contributing factors: Big price increases last year in feedstocks--paraxylene and ethylene glycol--prompted an attempt to raise prices last month. That effort failed, in part because prices of ethylene glycol then dropped 10¢ to 15¢/lb, which amounts to 3¢ to 5¢ of resin price. However, the price of paraxylene has remained high and is expected by some industry sources to move up further in the second quarter. A PET price hike is very likely to emerge in early in that quarter. While demand for PET has been soft, it typically picks up in the second quarter, too.
PVC Demand Weak, Price In Doubt
Resin producers and buyers alike complain of the accounting difficulty when resin prices aren’t known until a month or two after purchase. PVC may have risen 2¢ in January, but that won’t be decided until the indexes that now determine most pricing come out in late February. Over half of big buyers’ prices are based on an index or indexes. The rest of the market was invoiced 2¢ more.
Contributing factors: Pipe demand is very weak and prices are down. Resin producers’ operating rates are believed to be in the mid 80s, supported mainly by strong exports based on the weak dollar.
More Price Increases
DuPont raised prices of Elvax EVAs by 9¢/lb on March 1. In engineering resins, DuPont also hiked its Delrin acetals by 15¢/lb on Jan. 25. Also, Nycoa raised tabs on its nylon 6 products by 8¢/lb for truckload shipments on Feb. 11. And Lubrizol Advanced Materials added 16¢/lb to Estane TPU prices on March 1.
| Market Prices Effective Mid-Feb A |
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