Plastic markets snapshot

Plastic markets snapshot

After seeing resin prices move higher in 2010 by about one-fifth, plastics buyers and sellers report that resin pricing heated up at the start of the new year, slipped as spring approached, but has since rebounded to a sharply higher level.

Polyethylene pricing flattened out in December, forcing prime resin producers to move their proposed five-cent-per-pound increase to January. They had already nominated a six-cent increase for the first month, so struggle occurred in the marketplace over the 11-cent price increase attempt, with buyers saying no. Resin makers then nominated a five-cent price increase for February, only to be met with continued buyer resistance, which continued into March. However, a fire at a natural gas liquids storage facility in Texas severely affected ethylene production in late February, putting added pressure on the market. Thus, resin producers were able to get three cents more per pound in February, plus two cents more in March. Producers then nominated and attained a six-cent-per-pound increase for April.

With resins sales expected to grow more than four percent this year and with plastics production facilities operating at above 90 percent, PE prices are expected to remain fairly high.

After moving up by three cents per pound in December, the polypropylene market at the first of the year was dominated by a severe shortage of monomer, exerting added and extreme price pressure on plastics buyers. When Dow, Shell and Conoco Phillips propylene plants on the Gulf Coast took unexpected maintenance downtime, plastics makers encountered a surge in monomer pricing, with polymer-grade propylene moving up by 17 cents per pound or more. This led resin makers to get between 15 cents and 20 cents per pound more at the first of the year.

This resulted in an increase in output and a reduction in orders by plastics processors. Pricing was volatile but buyers were able to push for price relief, with prices then dropping. The value of PP declined five cents per pound in March, although producers said they’d try to push prices up in April. When monomer prices surged in the third month, spot prices rose dramatically and resin makers then posted price increases of about ten cents per pound for April. Industry members suggest that this price increase will be reached.

As with other resins, PVC producers were able to push prices up in March by about three cents per pound. Resin makers then sought an additional four cents per pound in the fourth month, and at least one producer wants an additional five cents in May. Although domestic PVC consumption remains weak due to weak sales to the construction industry, export demand remains healthy.

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