Plastics News: Commodity resins move in different directions in May

Posted on June 22nd, 2018 by plasticycle

Polypropylene in May continued in its role as the problem child of the North American resin market.

Prices for that material surged an average of 7 cents per pound in May, with regional PET bottle resin prices also ticking up an average of 2 cents. By comparison, prices for solid polystyrene resin declined an average of 4 cents for the month and linear low density polyethylene prices declined 3 cents.

Prices for high and low density PE and for suspension PVC were flat, according to buyers and market sources contacted by Plastics News.

Regional PP resin prices had dropped a total of 7 cents the prior two months, declining by 6 cents in March and by a penny in April. May’s 7-cent upward upheaval included 5 cents of matching price increases for polymer-grade propylene feedstock and 2 cents in profit margin improvement that was won by PP makers, according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas.

The market had started the year with a 9-cent hike in January and a 6-cent dip in February, meaning total price volatility for PP in the first five months of 2018 has been an eye-popping 29 cents.

Two ongoing supply situations could be tightening up North American PP supplies for June. In the first, Total Petrochemicals has declared force majeure on impact copolymer PP resins made at its plant in La Porte, Texas.

A spokeswoman with Total in Houston confirmed the force majeure in an email to Plastics News. She added that “an allocation program is being implemented.” Total has more than 2 billion pounds of annual production capacity in La Porte.

The company blamed “a series of unplanned and external events that have impacted [Total’s] production levels,” adding that the allocation was set to begin June 11. It’s unclear how much impact the Total outage will have on regional PP supplies.

In the second outage event, sources said Braskem America has had some minor production issues at its PP site in Marcus Hook, Pa. Sources who talked to Plastics News were split on whether that situation will have much impact.

North American PP sales through April were up just over 2 percent vs. the same period in 2017, according to the American Chemistry Council. A domestic sales increase of 2.3 percent was dampened somewhat by a reduction of almost 6 percent for sales into the export market.

The 2-cent PET hike for May came after prices for that material were flat in April. Prices had declined by a penny in March after nine consecutive months of increases totaling 13 cents per pound.

PET market analyst Mark Kallman of RTI said that the May increase was the result of shortened supplies from the paraxylene and purified terephthalic acid feedstock stream as well as “seasonal PET demand in an overall tight market.”

Demand for PET is increasing as warmer weather drives demand for bottled water and carbonated soft drinks, two of the material’s major end markets.

Solid PS prices in the region fell an average of 4 cents per pound in May after being flat in April and rising 4 cents in March. Prices for benzene feedstock were also down in both April and May, but the May PS decline “reflects general loosening in the supply chain rather than anything such as a one-to-one movement with benzene,” according to Phil Karig, managing director of the Mathelin Bay Associates consulting firm in St. Louis.

North American PS sales slumped 5.5 percent in the first four months of 2018. A domestic sales loss of 6 percent was softened somewhat by an increase of more than 12 percent in export sales.

The LLDPE 3-cent decline came after prices had been flat the previous two months since climbing 4 cents in February. Sources said that increased imports of finished LLDPE bags may have had a short-term impact on domestic resin demand, driving prices down as a result.

U.S./Canadian PE sales were mostly positive through April, as the impact of new production capacity throughout North America began to be seen. Regional sales of HDPE surged up 7.5 percent, with LLDPE sales soaring almost 12 percent. But sales of LDPE have struggled, slipping almost 2 percent.

For HDPE, domestic sales growth of almost 7 percent was augmented by export growth of almost 10 percent. Domestic HDPE sales growth in that period was boosted by a gain of almost 18 percent for sales into pipe and conduit, including a gain of almost 26 percent in water pipe.

In LLDPE, exports boomed more than 45 percent in the four-month period, boosting domestic sales that grew almost 3 percent. Domestic LLDPE sales into injection molding grew more than 8 percent in the three-month period.

LDPE’s 1 percent domestic sales drop in early 2018 was worsened by a plunge of 3 percent in export sales. In spite of the overall sales drop, sales of LDPE into extrusion coating outside of paperboard jumped more than 13 percent for the four months.

Regional suspension PVC prices were flat in May after moving down an average of 2 cents in April. That drop had followed a combined gain of 5 cents per pound in February and March.

U.S./Canadian PVC sales grew 6 percent through April, with export growth of more than 14 percent adding to an increase of more than 2 percent in domestic sales. Three-month PVC sales into its flagship rigid pipe and tubing end market were up more than 3 percent.

At the macro-feedstock level, U.S. prices for West Texas Intermediate crude oil were near $67 per barrel at the start of May but they had declined to $66 by the end of the month for a drop of around 1.5 percent. U.S. natural gas prices began May at $2.83 per million British thermal units, but they had jumped to $2.96 by the end of the month for an improvement of almost 5 percent.