Your Business Pricing Update - September 2008

Commodity resin prices were still rising last month, and still more hikes were pending, but market resistance was building. The reasons were continued soft demand, slowing exports, and—most critical—slipping monomer and feedstock prices. Futures prices for PE and PP dropped significantly.

 

PE PRICES PEAKING?

Polyethylene prices moved up 7¢/lb as suppliers fully implemented their July increases. This brought the total increase in PE prices this year to 18¢/lb. Further hikes not yet implemented at press time included 8¢ effective Aug. 1 and 5¢ for Sept. 1. Meanwhile, the London Metal Exchange (LME) North American short-term futures contract for September in blown film butene LLDPE was 75¢/lb, down from August’s 79.5¢/lb.

Contributing factors: A drop in oil prices brought signs of weakness in ethylene monomer tabs. Contract prices for ethylene saw a 5¢/lb increase for June and 4¢ more for July. But spot ethylene prices have dropped steadily. By early August, nearly 30¢ differential emerged between contract prices and spot prices as low as 45¢/lb. This should lead to lower contract prices, said Mike Burns, global business director for PE at resin purchasing consultant Resin Technology, Inc. (RTI), Fort Worth, Texas.

On the other hand, PE resin supply has been tight despite slack domestic demand. While domestic sales through June 2008 were down 5.5%, total sales were down less than 1%, thanks to strong exports. But by mid-August, global demand was starting to soften. Said RTI’s Burns, “I think the 8¢ August PE increase will be pushed back to September unless there is a spike in oil and ethylene prices.” A major PE supplier replies, “Global export demand has softened, but we expect China will be back in the game after the Olympics.”

 

PP PRICES MAY SOFTEN

Polypropylene prices moved up 11¢/lb in July, in partial implementation of announced hikes of 17¢, which included a 2¢ surcharge for transportation and utility costs. Total increases in 2008 through July come to 26¢/lb, out of overall increases of 45¢ since Jan. 2007. Meanwhile, a new 6¢ increase was announced for Aug. 1. The LME North American short-term futures contract for g-p injection-grade homopolymer in September was 77¢/lb, down from August’s startling 91.2¢.

Contributing factors: A gradual shift in market conditions is starting to favor PP buyers, according to Scott Newell, director of client services for PP at RTI. Not only is overall demand (domestic and export) down 6% to 7% through June, but resin supply appears looser. Most industry sources see little chance that the latest 6¢ hike will take effect. Says one source, “We are starting to see resin suppliers courting processors and deals trading at lower prices.”
The explanation is the recent dip in propylene monomer prices. Propylene supply is no longer as tight, spot prices have come down by as much as 10¢/lb, and contract prices are likely to follow. Newell expected monomer prices to be flat or down 2¢ to 3¢ in August. But September may see a sizeable drop, following the spot market trend, he said.

 

PET PRICES UP FOR NOW

PET prices moved up nearly 7¢/lb as suppliers implemented their July hikes. This brought the total increases this year to 15¢ to 17¢/lb. Price increases of 7¢ to 10¢ were pending from Aug. 1.

Contributing factors: Recent drops in feedstock and energy costs won’t help resin suppliers’ push for higher prices. Global prices of paraxylene, PTA, and ethylene glycol precursors all dropped significantly by the end of July, explains Michael Dewsbury, PET global business director at RTI. If anything, says Dewsbury, PET tabs could drop 5¢ to 10¢/lb.

 

PVC HIKE SPLIT IN TWO

PVC resin producers sent letters to customers in mid-August implementing 4¢ of the 8¢ increase announced for July 1, and stating that the other 4¢ would be effective Aug. 1. There appeared to be little resistance to the first 4¢, but there was opposition to the second. As one processor noted, “Every railcar is being negotiated.” Processors don’t expect the second 4¢ to stick.

Contributing factors: Spot ethylene was below 60¢/lb in mid-August while contract monomer was 75.5¢ and expected to drop a nickel. Demand was also softening.

 

PS UP 4¢ MORE

Defying gravity, PS producers asked for a 4¢ increase on both GPPS and HIPS for Aug. 1, deferred from July 15. America’s Styrenics and Ineos/Nova also announced new hikes of 4¢ on crystal and 5¢ on HIPS for Sept. 1. Total was still on the sidelines in mid-August.

The mid-July increases widened the spread between GPPS and HIPS to 6¢ from 4¢ in July and 2¢ on average before that, largely because of the worldwide tightness of butadiene rubber.

Meanwhile, EPS producers all announced 5¢ hikes for Aug. 1. Nova announced another 5¢ for Sept. 1, though BASF and Flint Hills (formerly Huntsman) posted 3¢ hikes for that date.

Contributing factors: Contract benzene was still high at $4.45/gal in August, up from $4.16 in July—hence the lack of resistance to the August PS hike. But spot benzene was only $4.15 to $4.20 and September prices are a dime lower still. So processors feel the September PS increase isn’t justified.

 

MORE PRICE INCREASES

Ticona, the sole North American producer of UHMW-PE, implemented two price increases in mid-June and August. Prices are now $1.22 to $1.52/lb, up from $1.00 to $1.25.

Ticona also raised prices 15% on July 31 for acetal, PBT, PET, polyester TPE, and Celstran long-glass compounds. DuPont boosted nylon prices 29¢/lb on Sept. 1. Zytel HTN nylons and PPAs went up 15¢, and acetal 15¢, while PBT, PET and Hytrel polyester TPE rose 12¢/lb. LCP and other specialties went up even more. Solutia hiked nylon 66 10% on Sept. 1. And on July 28, Rhodia imposed a “temporary surcharge” of about 3.6¢/lb on nylon 66 to compensate for the worldwide shortage of butadiene.

Evalca hiked Eval EVOH barrier resins by 45¢/lb on Sept. 1.

BASF lifted tabs on Styrolux and Styroclear styrenic block copolymers (SBCs) by 6¢/lb on Aug. 1. Kraton Polymers said its entire Kraton SBC line would go up “at least” 15¢ on Sept. 1. 

 

Market Prices Effective Mid-August A      RESIN GRADEb ¢/LB ¢/CU INc    ABS           MED IMPACT    95 - 115      359 - 434       HI IMPACT    100 - 135      378 - 510       X-HI IMPACT    110 - 150      415 - 567       HI HEAT    95 - 130      359 - 491       PIPE    95 - 105      359 - 396       SHEET    99 - 115      374 - 434       TRANSPARENT    134 - 205      506 - 774       FITTINGS    94 - 115      374 - 434       PLATING    134 - 205      506 - 774       FLAME RET    129 - 145      487 - 548       STRUCT FM    92 - 102      347 - 385       10% GLASS    134 - 145      506 - 548       30% GLASS    129 - 141      487       ABS/PC ALLOY    154 - 185      532 - 699       ABS/PVC ALLOY    139 - 144      525 - 544       ABS/NYLON ALLOY    199 - 355      752 - 1341       ACETAL           HOMOPOL    151 - 172      7.7 - 8.7       20% GLASS    171 - 235      8.7 - 11.9       COPOLYMER    144 - 160      7.3 - 8.1       25% GLASS    171 - 245      8.7 - 12.4       ACRYLIC           G-P    117      5.0       IMPACT    192      8.2       ACRYLONITRILE COPOL           EXTRUSION    101 - 116      4.0 - 4.6       INJECTION    120 - 135      4.8 - 5.4       ALKYD  65 - 74    4.9 - 5.5       CELLULOSICS           ACETATE    187      8.6       CAB    189      8.2       CAP    189      8.2       DAP (G-P)  251 - 497    16.7 - 34.7       EPOXY           G-P RESIN    116 - 126      NAd       COMPOUNDS               C/B/Te    123 - 166      9.4 - 12.9       R/C/Df    208 - 271      15.3 - 20.1       SEMICONDUCTOR               NOVOLAC    193 - 228      13.1 - 15.9       ANHYDRIDE    188 - 268      13.9 - 19.2       EVA           INJECTION    69 - 71      2.3 - 2.4       FILM EXTRU    67 - 69      2.3       EVOH  330    15       FLUORO-POLYMER           CTFE    5000 - 6000      385 - 462       ECTFE    1200 - 1680      90.7 - 120       ETFE    1205 - 1730      80.7 - 115.8       FEP    971 - 1470      74.8 - 113.2       PFA    1550 - 2520      120 - 195       PTFE    500 - 950      33.5 - 63.6       PVDF    730 - 1100      47 - 70       IONOMER           PACKAGING    127 - 166      4.3 - 6.0       INDUSTRIAL    150 - 244      5.0 - 8.3       LIQUID-CRYSTAL POLYMERS           INJECTION MIN FILLED    690 - 1035      44.2 - 72.1       GLASS FILLED    695 - 895      40 - 52       CARBON FILLED    1700 - 2000      83.2 - 138.6       UNFILLED    1000 - 1200      58 - 70       EXTRUSION UNFILLED    1200 - 2200      60.5 - 110.9       MELAMINE COMPOUND  90 - 94    5.5 - 5.6       MELAMINE/PHENOLIC COMPOUND  75 - 83    4.5 - 5.0       NYLON           TYPE 6    139 - 159      5.7 - 6.5       MIN FILLED    131 - 144      5.4 - 5.9       30% GLASS    148 - 173      6.0 - 7.0       TYPE 66    153 - 168      6.3 - 6.9       MIN FILLED    151 - 159      6.2 - 6.5       30% GLASS    142 - 192      5.8 - 7.9       TYPE 69    250 - 276      9.7 - 10.7       TYPE 6/10    286 - 313      12.4 - 13.6       TYPE 612    400      15.3       30% GLASS    309 - 311      14.7       40% GLASS    309      14.7       TYPE 46    295      12.6       TYPE 11    650 - 750      24.3 - 28       30% GLASS    NAd - NAd      NAd - NAd       40% GLASS    NAd - NAd      NAd - NAd       TYPE 12    318 - 341      12.1 - 13.0       30% GLASS    327 - 350      14.7 - 15.8       50% GLASS    299 - 340      15.6 - 17.8       TRANSPARENT AMORPHOUS    247 - 360      10.3 - 15.0       PHENOLIC MOLD COMP  75    3.8       REINFORCED GRADES    105 - 268      6.1 - 16       POLYAMIDE-IMIDEg           UNFILLED    2750      148.5       30% GLASS    2500      135       30% CARBON FIB.    3500      185       POLYARYLATE  200 - 280    8.8 - 12.3       POLYARYL SULFONE  440    21.8       POLYBUTYLENE           G-P    94 - 96      3.1       FILM    88 - 91      2.9       PIPE               COLD WATER    116 - 120      3.9 - 4.0       HOT WATER    162 - 166      5.5 - 5.6       POLYCARBONATE           INJECTION    171 - 182      7.4 - 7.9       20% GLASS    177 - 190      7.6 - 8.2       30% GLASS    178 - 217      7.6 - 9.3       EXTRUSION    145 - 180      6.3 - 7.8       BLOW MOLD    150 - 185      7.0 - 7.5       STRUCT FOAM    149 - 181      6.4 - 7.8       20% GLASS    235 - 255      10.1 - 11.0       FR    166 - 197      7.1 - 8.5       CD    135 - 195      5.8 - 8.4       POLYESTER (TP) PBT TYPE           UNFILLED    145 - 150      6.8 - 7.3       HI-IMP    165 - 175      7.8 - 8.3       30% GLASS, FR    195 - 215      9.2 - 10.1       STRUCT FOAM    159 - 165      NAd       PET           BOTTLE (RAILCAR)    91 - 93      4.6 - 4.7       MOD PET               30% GLASS    132 - 143      7.4       55% GLASS    148 - 155      9.8       30% GLASS FLAME RET    147 - 157      9.2       PETG COPOL    114 - 124      5.2 - 5.6       POLYESTER THERMOSET           G-P ORTHO    154 - 164      NAd       ISOPHTHALIC    183 - 198      NAd       BIS-A    218 - 238      NAd       PEEK  4400    231       30% GLASS    3300      173       POLYETHERIMIDE  641 - 646    29.3 - 29.5       30% GLASS    526 - 531      24.0 - 24.2       POLYETHERKETONE (PEK)  2950    130.1       30% GLASS    2600      153       POLYETHERSULFONE  350 - 400    17.2 - 19.7       30% GLASS    425 - 525      21 - 25.9       POLYETHYLENE (RAILCAR) LDPE           G-P MOLDING & EXTRU    93 - 95      3.1       INJECTION    95 - 97      3.1 - 3.2       LID RESIN    97 - 99      3.2 - 3.2       LINER    95 - 97      3.1 - 3.2       CLARITY    91 - 93      3.0 - 3.1       EXTRU COATG    96 - 98      3.2       BLOW MOLD    98 - 100      3.2 - 3.3       LLDPE, BUTENE BASED           G-P MOLDING    90 - 92      3.0       LME 30-DAYj    95 - 97      3.2 - 3.2       FILM    75     2.3      ROTOMOLD    92 - 94      3.0 - 3.1       LLDPE, HAO-BASED           G-P MOLDING    93 - 95      3.1       LID RESIN    103 - 105      3.4 - 3.5       LINER FILM    96 - 98      3.2       HDPE           G-P INJ MOLD    90 - 92      3.1       FILM    100 - 102      3.4 - 3.5       BLOW MOLD    100 - 102      3.4 - 3.5       HMW-HDPE           BLOW MOLDING    97 - 99      3.3 - 3.4       FILM    98 - 100      3.4       PIPE    105 - 107      3.6 - 3.7       UHMW-PE  122 - 152    4.1 - 5.1       PPE/PPO BASED RESIN           INJECTION    180      6.8       20% GLASSh    283      12.3       30% GLASSh    291      13.3       EXTRUSIONh    242      9.2       STRUCT FM    231      NAd       PPS           40% GLASS    450 - 520      27.0 - 31.2       55% GLASS/MINERAL    345 - 420      22.7 - 27.7       65% GLASS/MINERAL    270 - 315      18.9 - 22.1       POLYPROPYLENE (RAILCAR)           G-P HOMOPOL INJECTION    103 - 105      3.3 - 3.4       LME 30-DAYj    77.0     2.5      EXTRUSION FIBER    101 - 103      3.3 - 2.8       PROFILES    108 - 97      3.5 - 2.9       RANDOM COPOL               BLOW MOLDING    107 - 109      3.5       FILM    107 - 108      3.5       INJECTION    106 - 108      3.4 - 3.5       IMPACT COPOL               MED IMP    117 - 119      3.8 - 3.9       HI IMP    119 - 121      3.9       POLYSTYRENE (RAILCAR)           G-P CRYSTAL    98 - 104      3.7 - 3.9       HI HEAT    101 - 107      3.8 - 4.0       HIPS    103 - 109      3.9 - 4.1       SUPER HI IMP    109 - 115      4.1 - 4.3       FR    115 - 121      4.3 - 4.5       STRUCT FM (FR)    105 - 108      NA       EPS           UNMODIFIED    95 - 98      NAd       MODIFIED    96 - 100      NAd       POLYSULFONE  650 - 750    29 - 33       10% GLASS 430 20.6    799 - 875      36 - 39       30% GLASS 372 20.01    699 - 775      31 - 35       POLYURETHANE (TP)           ESTER TYPE    185 - 255      8 - 11       ETHER TYPE    245 - 295      10.6 - 13       PU ISOCYANATES           POLYMERIC MDI    125 - 145      NAd       80/20 TDI    135 - 145      NAd       PVC RESIN (RAILCAR)           G-P HOMOPOL    61 - 63      NAd       PIPE  60   NAd       FILM    66 - 68      NAd       COPOLYMER FLOORING    69 - 74      NAd       DISPERSION HOMOPOLY    81 - 87      NAd       COPOLYMER    86 - 90      NAd       CPVC PIPE COMPOUND    119      NAd       PVDC           EXTRUDABLE    162      NAd       SILICONES           MOLD. COMP.    581 - 640      38.1 - 39.3       SPECIALTY GR.    891 - 3148      NAd       SILICONE/EPOXY    339 - 343      22.5 - 22.8       STYRENEACRYLIC  108 - 112    3.7 - 4.0       SAN (G-P)  80 - 88    3.0 - 3.3       STYRENE MALEIC ANHYDRIDE           G-P    110 - 115      4.2 - 4.3       HI IMP    130 - 140      4.2 - 4.5       FR    175 - 183      6.7 - 7.0       TP ELASTOMERS           OLEFINIC    70 - 76      2.4       POLYAMIDE    300 - 350      10.9 - 12.7       POLYESTER    200 - 310      8.8 - 13.6       STYRENIC    82 - 237      2.9 - 8.3       UREA MOLDING COMPOUND           BLACK & BROWN               WHITE & IVORY               VINYL ESTER           COR RES    231 - 248      NAd       HEAT & COR RES    256 - 261      NAd

KEY: Colored areas indicate pricing activity. An arrow () indicates direction of price change. aTruckload, unless otherwise specified. bUnfilled, natural color, unless otherwise specified. cBased on typical or average density. dNot applicable. eNovolac and anhydride grades for coils, bushings, transformers. fNovolac and anhydride grades for resisitors, capacitors, diodes. gIn quantities of 20,000 lb. h19,800-lb load. jLME 30-day futures contract for lots of 54,564 lb..