Flat-to-Upward Pricing for PE, PP, PS, PVC, and PET

A combination of higher global crude oil prices, a firming up of prices of key feedstocks, higher export volumes in some cases, and a rebound in demand in some other cases, are key drivers in projections for flat to at least slightly higher prices ahead for PE, PP, PS, PVC, and PET.

Here is a look at how things were being viewed as we approach mid-February by purchasing consultants from Resin Technology, Inc. (RTi), Fort Worth, Texas; senior editors from Houston-based PetroChemWire (PCW); and CEO Michael Greenberg of the Plastics Exchange in Chicago.

PE: Prices rolled over in January, with no sign of implementation of the industry-wide 6¢/lb January increases. Suppliers moved the increases forward, generally splitting it in half—3¢/lb in February, 3¢/lb in March. Both Mike Burns, RTi’s v.p. of PE markets and PCW senior editor David Barry ventured there was a pretty slim chance that suppliers would implement a 3¢/lb hike in that timeframe.

Noted Burns, “This would be a totally supplier-driven increase…suppliers had the highest export volume for December, and the previous 5-6 months were also record months. Supplier inventory build was 300 million lb in December, the highest ever within the last decade.” He added that even with scheduled plant turnarounds planned for the March-April timeframe by LyondellBasell (LBI), Nova Chemicals, and CP Chem, there would be no dent made in material availability.  

The Plastics Exchange’s Greenberg reported spot PE volumes to be markedly improved from the last two months of 2018, with plentiful overall availability. “Export interest remains exceptionally strong and Houston area warehouses are still full and playing catchup from the year-end rush. More new resin production is on the way so it will be worth watching how the growing infrastructure will be able to handle it all.

PCW’s Barry reported that in their fourth quarter reviews, PE suppliers conceded that the increases capacity had impacted PE margins. He noted that ExxonMobil expected downward margin pressure to continue in 2019, whereas LBI sources saw the slower pace of capacity additions in 2019-20, to provide time for 4-5% global demand growth to absorb new supply. Barry reported that Sasol had nearly completed commissioning activities at its new 1-billion lb/yr LLDPE unit in Lake Charles, La., while ExxonMobil confirmed its new 1.4-billion lb/yr LLDPE unit in Beaumont, Tx., was on track for start-up in mid-year, and LBI expects to start up its 1.1-billion lb/yr HDPE project in Point Comfort, Tx., in third quarter.    

PP: Prices dropped 2¢/lb January, in line with propylene monomer prices which settled to 40¢/lb. As we entered February, PP and monomer prices had each dropped by 21¢/lb since November 2018. Not only was there no sign of supplier’s profit margin implementation, but there were industry reports of some margin erosion. Still, both PCW’s Barry and Scott Newell, RTi’s v.p. of PP markets, ventured that PP prices were bottoming out. Newell projected a rollover for February prices, and the potential of a 4-6¢/lb increase in monomer and PP within the March-April timeframe. Still, neither source anticipates PP prices to rise this year to the high levels of 2018, prior to falling.

Said Barry, “Right now, PP prices are pretty much in parity with global prices which last was the case in first-second quarter 2018.” He noted that PP plants were operating at high utilization rates—mid-90s, due to the low monomer costs. Noted Newell, “The lower prices attracted exports for the monomer as well as PP, which we had not see in a very long time, particularly to Latin America.”

The Plastic Exchange’s Greenberg reported that despite growing supplies of propylene monomer upstream, prices had stabilized and were pointing to slowly rising ahead. Going into February, he described spot PP trading as fairly active, reporting that PP copolymer held more interest than homopolymers for both buyers and sellers, as was the case with more specialty commodity grades, such as “No Break” and “Random Clarified”.

PS: Prices dropped by 2¢/lb in January, following a 7¢/lb drop in December, and this month appeared to be a rollover from January barring an unplanned disruption event, according to both PCW’s Barry and Robin Chesshier, RTi’s v.p. of PE, PS and nylon 6 markets. Both sources ventured that PS prices had bottomed out, and projected flat-to-upwards movement this month if not in April.

PCW’ s Barry noted that implied styrene production costs based on a 30/70 formula of spot ethylene and benzene were at 23.6¢/lb, up from around 22¢/lb at the start of the year. He ventured the pricing trajectory would largely depend on crude oil and benzene prices and demand for styrene monomer exports. Chesshier noted concern going forward about adequate benzene supplies—both domestic and imports She expected higher benzene prices, which combined with how PS demand shapes up as we go into second quarter, could result in increases totaling 3-7¢/lb within the March-April timeframe. An upwards trajectory for both spot styrene monomer and butadiene, in addition to benzene, would appear to help support a firming up of PS prices. Chesshier noted higher styrene monomer exports demand and from new destinations—primarily Africa, to offset export tariffs imposed on China.

PVC: Prices rolled over for the third month in a row in January, but the landscape was likely to change with PVC suppliers seeking a 4¢/lb increase in February, according to both Mark Kallman, RTi’s v.p. of PVC and engineering resin markets and PCW senior editor Donna Todd. Kallman ventured that implementation of a 1-3¢/lb increase between February and March was as possible as was flat pricing—depending on demand, which appeared slowed domestically and globally. Second quarter when things typically “heat up” in terms of demand could result in a pricing trajectory change, he noted.

Todd noted that one industry pundit was predicting suppliers’ increase would be split in half for February and March. “As usual, resin buyers were divided in to two camps over the impending 2¢/lb increase for February. Pipe converters were mostly pleased to see a PVC price increase announced, as they figure it will enable them to push up their own pipe prices. Non-pipe PVC converters were not pleased with such an early price hike and “flimsy reasoning”—with no key drivers to support the increase, Todd reported.

PET: Prices for domestic bottle-grade PET going into February were at about 63¢/lb, 3-5¢ down from January. Bloated supply from U.S. producers and imports from around the world are making it a buyers' market, according to PCW senior editor Xavier Cronin. Imported PET was in the low-to-mid-60s cents/lb for delivery to port—higher for East Coast than West Coast destinations. Truckload business was seen 2-5¢/lb higher, depending on distance.

Cronin reported that market sources saw prices rebounding this month 1-3¢/lb for prime PET as demand for PET bottles and packaging expands ahead of the warm-weather heavy-consumption period for carbonated soft drinks and other beverages in PET bottles. At the same time, demand for rPET clear FDA pellet remains strong and competes in some instances with prime PET (and offgrade) as consumer brand companies seek more recycled plastic in their bottles, containers and packaging. Meanwhile, the removal last fall of U.S. anti-dumping duties from five countries which accounted for about 40% of all imports in 2017, was expected to increase PET imports this year.