The price trend for resins in the third quarter seems to develop differently for the five large-volume raw materials. The persistently high demand and the scarce supply will at least keep the prices for PE and PP stable. In contrast, PS prices are finally trending down as the main drivers – raw material costs – appear to be easing, while PVC and PET resin prices also seem to have peaked for now.
These are the views of purchasing advisors from Resin Technology, Inc. (RTi), Fort Worth, Texas, senior editors from PetroChemWire (PCW) and CEO Michael Greenberg of the Plastics Exchange.
According to these observers, some of the most important challenges are in the game. One is the problem of sourcing resin imports, which usually help in tight supply situations. Before COVID 19, there was a finely tuned maritime logistics system and the industry is now struggling to return to some appearances. For example, resin containers have been a problem – not because of a lack of containers, but because they were not being transported to their destinations at predictable speeds. Weather-related production interruptions are another obstacle in what is likely to be a very active hurricane season. While resin suppliers are working to build up their inventories after last year’s major disruptions and also anticipate this season’s hurricane disruptions, industry watchers say there isn’t much leeway, especially in the case of polyolefins. They therefore advise processors to build up an additional resin buffer.
Polyethylene prices continue to rise
Polyethylene prices rose 5 ¢ / lb in June and suppliers were targeting a further 5 ¢ / lb hike in July which is expected to take effect earlier this year due to continued high demand and tight supply due to unplanned disruptions. That was the view earlier last month of Mike Burns, RTi’s vice president of PE Markets, PCW executive editor David Barry, and Greenberg of The Plastic Exchange. If the July hike is enforced, year-to-date PE prices would total 41 / lb for HDPE and 43 ¢ / lb for LL / LDPE resins.
RTi’s Burns noted that allotments and sales controls remained in place for most resins through June, noting that suppliers were building inventory but were forecasting solid prices for the third quarter. “We will see prices fall when the 40% overcapacity – which would normally be exported – returns.” He also ventured that demand would slow towards the end of the year and predicted that inventory would build up the supplier could turn out to be the beginning of a 90-day recovery in May / June. (RTi’s supply model estimates that it would take 90 days of continuous production to balance supply and demand for PE.)
PCW’s Barry dared that August prices could be flat. “It is becoming more difficult for suppliers to charge domestic customers much more than export prices – currently a 20 to 30 / lb gap. Once the logistics for moving containers and freight problems are resolved, we will likely see more imported PE finished goods. “
All sources characterized spot PE prices as generally fixed, with demand exceeding supply, especially for PE injection-molded grades. Greenberg reported that the prices for such grades rose by 2 ¢ to 3 ¢ / lb; HDPE blow molding resin was still in short supply and imports filled some of the void; HMW film moved up another 2 ¢ / lb as supply tightened; while LDPE and LLDPE for film both remained stable. “Although PE production has continued to improve overall and upstream stocks have been replenished, producers are still not in their normal delivery position again, which has been confirmed by the continuing shortage of spot material. At least one producer claimed to be sold out by August, ”he said.
Polypropylene prices are volatile
Polypropylene prices rose by a total of 12 ¢ / lb – 4 ¢ in step with propylene monomer and 8 ¢ with non-monomer increases in suppliers. In addition, for July suppliers have made additional “margin” increases of 3-5 ¢ / lb on top of any changes in monomer prices, according to Scott Newell, RTi’s VP of PP Markets, as well as Barry and Greenberg.
Realizing potential for another double digit price hike in July and August, Newell noted, “Suppliers still have pricing power as things are still tight, demand is strong and although volumes of PP imports are increasing there are many logistical challenges, to do that, get them in place. “PCW’s Barry noted that PP imports continued to arrive in above-average quantities, placing some buyers in a more convenient storage position for July. Nonetheless, he reported that import volumes continued due to a shortage of empty containers in Asia. “There have been reports that the container problem was gradually easing, but freight costs were still very high,” he noted.
Newell foresaw continued supply and pricing problems for PP for the remainder of the year. He also pointed to the challenge of a general labor shortage, as a result of which some processors reported reducing production rates to 75% to 80% of capacity, with backlogs increasing. Greenberg reported that spot PP trading was a little slower. “Domestic prime was not yet available on the spot market, but imported prime was available on both the east and west coasts. Overall, PP prices continued to consolidate: on the upper side, spot prime prices fell by a cent, while the lower end of the price spectrum climbed by at least one nickel. ”Barry reported a gradual improvement in the spot availability of homopolymer and statistical Copolymer, but lasting tightness of the impact-resistant copolymer due to a series of interruptions in delivery.
HP prices down
Polystyrene prices fell 8 ¢ / lb in June, the first price decline since May 2020, according to Barry and Robin Chesshier, RTi’s VP of PE, PS and Nylon 6 markets. Price increases since May 2020 totaled 57 ¢ / lb and were driven by higher prices for benzene, ethylene and styrene monomer. The trend reversed in June with benzene falling $ 1 / bile, ethylene falling 9 ¢ / lb and styrene 10 ¢ / lb.
Barry reported that commodity trends in July indicated another drop in horsepower prices and that many spot buyers stayed on the sidelines choosing to keep inventory levels as low as possible. He said the implied styrene cost based on a 30/70 ratio of ethylene / benzene had decreased to 38.4 ¢ / lb, which had fallen 4.4 ¢ by July. Chesshier found that between November 2020 and May 2021, suppliers raised PS prices by 30% more than they incurred the raw material costs. It estimated HP prices would fall 9 ¢ to 10 ¢ / lb in July, based on benzene price nominations in July of $ 3.10 to $ 3.20 / gal. She expected horsepower prices to remain unchanged in August. “If benzene prices remain at the lower level, PS processors will seek further price concessions from suppliers.” Both sources characterized demand in the packaging, medical and construction sectors as weak.
Top of PVC prices?
PVC prices rose 1.5 ¢ to 3 ¢ / lb in June as suppliers targeted a 3 ¢ price hike, according to Mark Kallman, RTis VP for PVC and Engineering Resins and PCW Senior Editor Donna Todd. This discouraged suppliers from issuing a July hike while trying to enforce the full June hike. Todd reported that July was the first month of the year that no new price hike was on the table.
Kallman ventured that PVC prices had now peaked, citing a decline in both ethylene prices and exports. One caveat: The chlorine prices had risen due to unplanned production interruptions from May to June. Given that all PVC suppliers produce both ethylene and chlorine, Todd said ethylene prices fell a total of 13 ¢ / lb in May and June, relieving PVC suppliers of the raw material cost for that half of the molecule procured. Kallman expected the market to stabilize in July, while August was also likely to see flat resin prices. “We were heading for stability in the third quarter and there was hope that stocks would be restored.”
PET prices flat
PET prices appeared to remain unchanged through July, although suppliers tried to impose markups in the 2 ¢ to 4 ¢ / lb range. RTi’s Kallman noted that there appeared to be no consistency in the implementation of these markups and reported that prices for its key commodities, paraxylene and PTA, remained fairly stable through June. He ventured that PET prices could rise slightly by the end of July, around 0.5 / lb, but could fall slightly in August based on raw material prices.
Calling the market balanced, Kallman found that most processors were getting what they needed, but no longer – 19 an emergency was losing weight. He noted that PET imports have apparently slowed since late April due to container logistics and could remain lower into the fourth quarter.