E-shots Web-exclusiveResin knowledge-gram: Market indicators

This quarterly report on smart resin purchasing helps you make every pellet count.

The summer lull was barely noticed in the midst of price increase announcements, varied demand cycles, and crude oil prices that at one point saw futures rise as high as $80/bbl. For general polymer and engineering resins, upstream market trends were closely watched for signs of price change that could ultimately impact prices related to various resins. While producers have most often preferred to keep the cost of production directly out of the buying equation, when crude reaches historical highs and transportation costs increase, pressure is likely to rise to cover these upward shifts in costs.

Polyethylene prices saw a $.06/lb jump in June, with producers intent to reap another $.07/lb in July; however, quiet market conditions shifted the $.07 to August. In August, buyers experienced roughly a $.05/lb increase, not the full $.07/lb, in most cases. The shift in price was due in part to processors holding sufficient inventory and enough supply at the producers to satisfy the domestic market need for material.

In the polypropylene arena, prices were strong, and up, in May and June, primarily driven by limited supplies and strong monomer values. In July, prices eased with lower contract monomer prices and slightly more availability, providing buyers a $.03-$.04/lb price reduction. However, this move was short-lived as suppliers announced August increases of $.04/lb. Of this, buyers saw $.03-$.04/lb on average, depending on the specific buyer/seller agreements.

Further increase announcements were made for September. In support of this increase was a $.03 hike in the August polymer-grade propylene contract, but for the buy side PP has become more readily available during the past several weeks.

In engineering resins, ABS prices have been on the rise in tandem with several upstream cost factors. Prices were up in July (on average $.04/lb) and several suppliers are giving consideration to announced increases of $.06-$.08/lb for August. ABS prices in Asia have increased to $.70-$.75 but Far East ABS suppliers still have a window of opportunity to export to the United States, given the significantly higher average North American prices. Participants are watchful of upstream spot benzene, which again neared the $4/gal mark, but had dropped into the low $3.60s by mid-August.

Polycarbonate demand was classified as good overall, but there was plenty of available resin in all regions due to significant PC capacity additions globally. Higher benzene/other feedstock costs have stabilized short-term PC pricing. Several PC producers have announced price increases of $.08-$.12/lb; implementation has not yet occurred market-wide.

Like ABS, lower prices in PVC saw consistent demand throughout June and July, slowing somewhat in August. There was a $.02/lb increase in discussion for the month as well as an announced $.04/lb hike to be considered for September. Overall supply is good and overall PVC margins have been proceeding at levels higher than previously seen in the market.

With a solid resin-purchasing plan in place, molders can make the most of the markets' ups and downs and twists and turns. A consistent 10,000-ft view of the market, such as the one provided in this article, is vital to successful purchasing. One data point is not enough to gauge where markets stand with regard to price, availability, and purchasing opportunities. Without a solid resin-buying plan, one that takes into account everything from current price offers to the cost of natural gas, savings are lost with every order placed.

Take a moment to consider how you buy resin. Do you have a plan? Do you have one person dedicated to researching what goes into the prices you are quoted and if they are actually where the market is positioned? If you do, congratulations on your forward planning. If you don't, perhaps it's time to ask yourself, “Why not?”

As a molder, you invest in machinery that is cost-efficient and gets the job done. Saying the same about your resin purchases could result in significant pennies saved on every pound you buy.

Editor's note: Cindy Bryan is director of market research at Ft. Worth-based Resin Technology Inc. (RTi), which provides resin pricing consultation services. She can be reached at (817) 569-0252 or via www.resinpros.com.