PE, PP prices show January increases

North American commodity resin prices started 2024 in full stride, with prices for two materials up in January, while prices for two others declined.

Polyethylene and polypropylene resins started the year with higher prices. Prices for all grades of high, low and linear low density PE were up 5 cents per pound in January, with prices for PP in the region up 3 cents, according to market sources contacted by Plastics News.

PE prices had been flat for the previous three months, while PP prices were flat in December after increasing in each of the previous three months.

The 5-cent PE hike was fought by buyers but ultimately went through, as PE makers leveraged production issues that hit the Gulf Coast after freezing weather in mid-January.

Ethylene and propylene units operated by Formosa Plastics Corp. USA in Point Comfort, Texas, were affected by the cold. Major PE makers now are seeking a 5-cent increase for February.

Both Ineos Olefins & Polyolefins USA and Chevron Phillips Chemical Co. had reduced operating rates in January because of the cold weather. Ineos took that action on an ethylene cracker at its Chocolate Bayou plant in Alvin, Texas, while Nova Chemicals shut down a site in Geismar, La., making ethylene, propylene and butadiene.

Market analyst Mike Burns with Plastic Resin Market Advisors said PE inventories on the processor level are "healthy," as many buyers bought in December to fill their needs for early 2024. He added that North American PE makers had "a big export month" in January.

North American PE makers "have been quite successful in increasing their exports, in line with the expansion of capacity," according to Esteban Sagel, principal with Chemical & Polymer Market Consultants in Houston.

Historically, as recently as the mid-2000s, exports made up only about 20 percent of North American PE sales. Since that point, increased access to shale gas and oil feedstocks have allowed producers to add large amounts of capacity with an eye on the export market. Exports now account for more than 40 percent of North American PE sales.

Sagel said the increased reliance on exports "comes at a price" for North American PE makers.

"The new reality for exporters is that they had to change the mix in their trade portfolios," he added, moving their focus from North and South America to Northeast and Southeast Asia.

In the U.S., Sagel said, PE profit margins on domestic sales are the lowest they've been in a decade, so producers "will do everything they can to try to keep them from falling further."

These factors also were reflected in recently reported full year 2023 results for Dow Inc.'s Packaging & Specialty Plastics unit, including one of the world's largest polyethylene resin businesses. For the year, P&SP had sales of $23.1 billion — down 21 percent — and operating profit of $2.7 billion — down 34 percent.

PP follows PGP

The January PP price hike again followed a change in price for polymer-grade propylene (PGP) feedstock.

North American PP prices were up a net of 17 cents per pound in 2023. As with PE, the PP market was affected by the Gulf Coast cold snap. In addition to the Ineos and Nova cutbacks, Enterprise Products briefly shut down a PDH unit making propylene monomer in Baytown, Texas.

After the cold snap, mechanical issues led Ineos to place force majeure supply limits on PP resin made at Chocolate Bayou. The site has annual production capacity of about 1 billion pounds of PP. Ineos also operates almost 4 billion bounds of ethylene capacity and almost 1 billion pounds of propylene capacity there.

Recent upswings in PP pricing are at odds with demand for the material, which has been in decline. Market sources cited American Chemistry Council data that showed North American PP demand was down about 4 percent on a monthly basis in both September and October.

Sagel said PP follows closely the trends in propylene prices in the region, but since propylene prices are more globalized, the floor of North American propylene prices is "really determined by Asian prices."

Lower PP demand, increased domestic supplies and higher prices vs. other resins or vs. PP from other regions "can have a depressing impact on margins and prices," according to Sagel. "My expectation is that PP prices will trend lower but will be affected by short-term dynamics and be quite volatile," he said.

As with Dow, LyondellBasell Industries saw these market trends affect its 2023 results. Sales at the firm's Olefins & Polyolefins-Americas unit — including ethylene, propylene, PE and PP — dropped 22 percent for the year to $11.3 billion, with operating profit down 25 percent to less than $1.7 billion.

Drop for PS

Polystyrene resin prices were down an average of 2 cents per pound in January, marking the third consecutive month that prices were down for that material.

The 2-cent drop followed a price drop for benzene, which is used to make styrene monomer. Benzene prices declined almost 5 percent to $3.19 per gallon in January, a drop of 16 cents.

Improved domestic supplies helped drive benzene pricing down for the month. One market source told PN that there was "a lot of variability" in PS pricing for January. Regional PS prices had been down 3 cents in December and 4 cents in November after climbing a total of 12 cents in the previous three months.

North American PS prices finished 2023 up a net of 1 cent per pound and benzene prices up 28 cents. Global PS markets had to deal with oversupply and low demand growth for most of the year.

PS pricing in early 2024 will be affected by a temporary shutdown of styrene production at a plant operated by Americas Styrenics in St. James, La. The unit was taken down for scheduled maintenance on Jan. 21 and resumed production on Feb. 23. The unit has annual production capacity of about 1.1 billion pounds of styrene.

PET prices fall

PET bottle resin prices took a surprising 5-cent drop in January as buyers rightsized their inventories. Prices for the material had dropped a total of 7 cents from October to December. Regional PET prices finished 2023 down a net of 4 cents per pound.

PET demand was lower than expected in 2023, even during the warmer summer months. Bottled water — the largest beverage segment in the U.S. and a major consumer of PET — continues to grow, but it has slowed in recent years, according to a recent report from consulting firm Beverage Marketing Corp.

At a recent industry conference, BMC Managing Director Gary Hemphill told attendees the bottled water category grew by 0.5 percent in 2023, according to preliminary data. That's down from 1.1 percent in 2022 and much higher growth rates ranging from 3.7 percent to 6.1 percent annually from 2017 to 2021.

Higher prices and the segment's "mammoth size contributed to its modest growth," Hemphill said in his presentation. Hemphill's bottled water category includes a half-dozen different sizes and is dominated by the single-serving size that's typically 16.9 ounces or a half-liter in size. "It's one of those situations as single-serve PET [container] segment goes, so goes the category to a great extent," Hemphill said.

North American prices for PVC were flat in January after declining by 1 cent in both November and December. The flat pricing in January surprised some market-watchers since construction suppliers typically build their inventories early in the year.

U.S. housing starts for January came in at an annual rate of 1.47 million, according to the U.S. Census Bureau. That number is down more than 1 percent vs. December 2023, but up almost 9 percent vs. the same month in 2023. Construction activity accounts for about 60 percent of North American PVC demand.

Recycled resin pricing changes

For recycled resins, prices for recycled HDPE and PP pellets have increased in early 2024, while prices for recycled polycarbonate fell in the second half of 2023.

Prices for mixed-colored, post-consumer HDPE pellets increased by 2 cents; mixed-colored, post-industrial pellets increased by 4 cents; and natural post-consumer pellets increased by 3 cents. Throughout the second half of 2023, a surplus of material meant buyers were seeing price decreases for recycled HDPE.

A manufacturer in the Midwest noted virgin HDPE prices were flat in December 2023, which helped demand for recycled resin.

On average, recycled PP pellet prices have increased 9 cents per pound, according to sources. That brings the current range to 45-47 cents.

A source in Pennsylvania said post-industrial PP is affected by pricing for wide-spec virgin resin, which in turn is impacted by PGP prices. The source said recycled PP prices have been up for four or five months.

Prices have been increasing because there has been less wide-spec available in the market. The market is still recovering from the drop in demand, as prices in 2022 for recycled PP were higher.

"We've seen a softness in the market over the last six months, but it's starting to pick back up," said a recycler in Ohio.

Recycled PC has been slightly decreasing or flat over the last 12 months. There was a steady decline from the end of 2022 to mid-2023, and it has been mostly flat since then.

The new pricing range for clear industrial regrind is 66-71 cents, mixed colors industrial regrind is 42-47 cents, and mixed colors pellets is 48-53 cents. For 2024, recycled PC is expected to have a slight increase within the next five to six months. Sources estimate the increase to be less than 5 cents per pound.

In feedstocks, West Texas Intermediate oil prices opened January under $72 per barrel but climbed almost 6 percent to just under $76 by the end of the month. From that point, prices have bounced up another 3 percent to almost $78.50 on Feb. 22.

Markets for natural gas — used as a feedstock to make PE and PVC — started January at $2.51 per million British thermal units, but high inventories sent prices swooning more than 16 percent to $2.10 by the end of the month. From that point, prices continued to tumble, falling under $1.60 before improving to close at $1.77 on Feb. 21 — down almost 16 percent for the month to that point.

* source : https://www.plasticsnews.com/resin-pricing/pe-pp-prices-show-january-increases