Source: Nova Chemicals
Going into May, the continued conflict with Iran and stranglehold on the Strait of Hormuz, continued to significantly impact global resin trade flows as supplies of energy and petrochemical feedstocks remained impeded. The most dramatic impact in terms of unprecedented price increases is taking place in polyolefins, with some in polystyrene (PS), though that movement is linked solely to higher feedstock costs.
Some major polyethylene (PE) suppliers say they expect nearly half of the global ethylene and PE supply disruption to persist for the remainder of the year, keeping prices higher. Suppliers of polypropylene (PP), meanwhile, are seeking ‘non-monomer’-related price increases in addition to rising contract settlements of polymer-grade propylene (PGP). Elsewhere, several major suppliers of plastic additives, particularly those used in polyolefin formulations, such as antioxidants and UV stabilizers, issued price increases of as much as 25% as of April 1.
Below are the views of purchasing consultants from Resin Technology Inc. (RTi); David Barry, associate director for PE, PP and PS at OPIS’ PetroChemWire (PCW); Michael Greenberg, CEO of Resintel, the market intelligence service of The Plastics Exchange (TPE); Scott Newell, EVP of polyolefins at distributor/compounder Spartan Polymers; and Mike Burns, VP of PE markets at Plastic Resin Market Advisors.
Source: (all) Plastics Technology
PE Prices Up
PE prices in April generally appeared to have moved up by the full 30¢/lb sought by suppliers, bringing the total increases this year to 45¢/lb, according to Barry, Greenberg, Burns and Kevin Mekaru, RTi’s senior business leader for PE, polyethylene terephthalate (PET) and nylon 6. Mekaru notes that this was “certainly more of a margin expansion”, when taking into consideration that supplier inventories were flat and exports were somewhat lower. Mekaru says a 10¢/lb price hike would have been more realistic.
Meanwhile, suppliers were seeking another 20¢/lb for May, for which most of these sources did not anticipate full implementation, speculating that half or less is more likely. The same is forecast for June, though the situation is very fluid and crude oil is likely to climb further, pushing feedstock costs up globally. As Greenberg puts it: “While producers [suppliers] have reiterated their intent to implement the next 20¢/lb increase on May contracts, it will be challenging unless the Iran War flares up again or Chinese suppliers back away from their aggressive selling to reopen massive export sales.”
Barry notes that spot prime resin prices in April were close to the $1/lb mark, while exports also rose with low-density polyethylene (LDPE) at 90¢/lb and linear low-density polyethylene (LLDPE) selling in the mid-to-high 80s. Mekaru expects that exports will continue to account for nearly 50% of North American production. All sources report that by April’s end, well-priced PE from China, which is now a net exporter of PE, has been sold globally and resulted in the lowering of North American PE exports as well as spot prices.
Burns ventures that for LLDPE and high-density polyethylene (HDPE), the decline in spot market pricing due to the parallel decline in export pricing is a leading indicator of weakness for the May price hike. “Expectations of the April price increase to be the short-term high are reasonable,” Burns says. “As the price delta between the contract and secondary market continues to grow, the possibility of late May or June/July non-market activity increases.” As for LDPE, he notes that reduced availability from Iran into southeast Asia and China continues to strain that market, and while North American production and demand levels remain constant year over year, the overall global supply is in a deficit, keeping prices firm.
“For now, PE remains in correction mode,” Greenberg says. “Supply is not loose, and producers still have price initiatives to defend, but buyer participation has thinned and export competition has weakened the broader structure. That does not mean the domestic market is oversupplied, but it does mean the export bid is no longer chasing the market higher. Until demand reappears with greater conviction, the near-term bias remains softer despite the global supply chain quagmire.”
PP Prices Up
After their first-quarter increase of 14¢/lb, PP prices in April were expected to move up 12.5¢/lb, in step with the contract settlement of PGP. In addition, PP suppliers aimed to implement non-monomer price increases of 4-10¢/lb, according to Barry, Greenberg, Newell and Greg Eberhardt, RTi’s senior business unit leader for PP. Newell and Eberhardt venture that suppliers could implement about 4-7¢/lb of their margin increases, bringing the total April price hikes to 16.5-19.5¢/lb.
The April PGP contract move represents the fourth consecutive monthly increase and is the highest price point since May 2022, according to Barry. Suppliers also issued a range of non-monomer increases of 5-10¢/lb, but most of these sources anticipate a slighter increase with June possibly flat. Meanwhile, PGP costs were viewed as extremely unpredictable, with the monomer market appearing to react more to Mideast headlines than to domestic supply/demand fundamentals.
These sources also note that U.S. PP export demand was flagging due to higher prices. While there were reports of exports to Europe and Japan, exports to Latin America have been challenged by lower cost resin from China. Barry says domestic processors stocked up in March and April, and large processors were expected to continue absorbing near-maximum contract volumes in May, due to the lack of discounted spot availability. There were concerns, however, about slowed demand in the May-July timeframe, particularly if further price hikes are implemented.
“Structurally, the market is still supported by elevated feedstock costs and a global system that remains somewhat constrained,” Greenberg explains, “but in the near term, the tone is clearly shifting. Demand has cooled, buyer urgency has faded and PP is behaving more like a domestically driven market again. The takeaway is that PP is moving into a consolidation phase. The extreme volatility is behind us for now, but the market is not weak — just recalibrating. The next move will be determined less by fear and more by fundamentals: monomer stability, contract settlements and whether demand returns at these levels.”
PS Prices Up
After implementation of a 5¢/lb increase in March, PS suppliers were aiming to increase prices in April by 17-19¢/lb, with the former figure for general-purpose polystyrene (GPPS) and the latter for high-impact polystyrene (HIPS), according to Barry and Brian Balboa, RTi’s senior business unit leader for PS and PVC. Barry notes that the higher increase sought for HIPS was attributed to a sharp rise in butadiene prices. “Despite the cost pressure from butadiene rubber,” Barry says, “the spread between GPPS and HIPS spot prices has been steady through April.”
Moreover, suppliers issued price hikes of 10-12¢/lb for May for GPPS and HIPS, respectively. Balboa ventures that suppliers could well implement 16-17¢lb across-the-board hike in April but that the price increases sought for May could be difficult to implement. “While demand has picked up during this typically active season and production rates have been elevated to about 61%, versus the mid-50s, previously, percentage wise,” Balboa says, “last year to date, rates were at 67%.”
The overall key driver is benzene prices, with the May contract settling at $4.71¢/gal, up 62¢/gal from April. Ethylene contract prices in April also were expected to settle up by 4¢/lb, based on spot prices averaging 7-8¢/lb by month’s end. Barry reports that the implied styrene price — based on a 30% ethylene, 70% benzene spot formula — rose to 54.3¢/lb going into May, which is 3-4¢/lb higher compared to early April and up by nearly 16¢/lb to 38.2¢/lb in early March.
PVC Prices Up
March polyvinyl chloride (PVC) prices finished higher, increasing by 5¢/lb, Balboa reports. Though some large buyers paid 3¢/lb, prices in April were largely expected to move up by 5¢/lb across the board, according to Balboa. “The main driver here is not so much higher ethylene prices but rather the large inventory drawdown from planned and unplanned plant shutdowns, which continued into May,” Balboa says. He notes that the market started the year with record-high inventories, so while it is not tight, it is snugger. As such, he expects a minimum increase of 3¢/lb could be likely in the May-June timeframe.
PET Prices Up
Prices of PET, having moved up 8-10¢/lb in March, moved up another 3¢/lb in April and were likely to increase by another 2¢/lb in the May-June timeframe, according to Mekaru. The increases are attributed to sharp raw material formulation cost increases — particularly for paraxylene and terephthalic acid (PTA) — and as a result of supply chain interruptions. The same applies to higher ethylene prices. Mekaru says that prices would somewhat stabilize as the domestic market is still considered oversupplied and includes imported PET that processors have previously locked-in at favorable prices.
