Global uncertainties ruffle resin markets

Polyethylene (PE) railcar offers again began to flow and prices were softer the week of July 6, according to PlasticsExchange analysis. Polypropylene (PP) supplies remain spotty, with sporadic periods of improved liquidity; spot PP prices slipped this past week following PGP monomer. Concern about the strength of the Chinese economy and associated turmoil in Asian equity markets, the Iranian nuclear deal, as well as uncertainty regarding Greece's position in the EU added to global resin market weakness.

The spot ethylene market had a busy week. Ethylene for July delivery began the week under pressure, initially trading down a full penny to $0.34/lb. The market recovered and actually reached into positive territory, before retrenching for a small fractional loss for the week. The forward ethylene curve remains essentially flat, with prices through the end of 2016 all within a cent of prompt levels.

Availability improved and prices were down $0.01 to 0.02/lb in the spot PE market, with film grades giving back the most. The export market has slowed significantly, as price declines in China and general economic uncertainty in the region has turned some buyers into sellers. Weak energy, feedstock and export markets are stymying producer efforts to implement their $0.05/lb price increase for July contracts, adds the PlasticsExchange. Several have officially pushed off the increase to August, and some observers feel that it would be challenging even to hold prices flat this month.

Spot propylene prices continued to erode, breaking below $0.34/lb for the first time since June 2009.

The PP market continues to experience solid demand and insufficient supply caused by production issues, maintaining elevated spot prices. Falling feedstock costs have been driving down contract prices, as many processors' contracts still have some connection to PGP monomer. The spot PP market shed a couple of cents this past week, as July PP contracts are poised to slide a little again, but not as much as PGP monomer.

The full weekly report is available on the PlasticsExchange website.

Also in resin pricing news this month

Honeywell Resins and Chemicals (Morris Township, NJ) announced on July 13 a price increase of $0.10/lb over the current price of caprolactam and nylon 6 resins for customers in North and South America. The increase is effective with shipments July 20, 2015, or as contracts allow.

DSM (Singapore) blamed increasing raw material prices for boosting the price of Akulon and Novamid polyamide 6 polymers. DSM announced on July 7 that it will increase prices by $0.10/lb in North and South America. This increase will take effect for all orders shipped on or after July 24, 2015, where contracts allow.

Lanxess (Cologne, Germany) also referenced a significant increase in raw material costs as the reason for raising the price of its flame-retardant Pocan (polybutylenterephthalate) compounds globally by €0.15 per kg on average effective July 1, 2015. The price level of nonflame-retardant Pocan compounds remains unchanged.

On a general note, the cost of raw materials in Europe have soared to record highs in recent months, largely on the back of force majeure declarations, of which there have been more than 40 just in the last four months. Some plastics processors have been forced to shut down production lines, writes Karen Laird in a blog post on PlasticsToday.

Feelings are running high, writes Laird, as affected companies accuse raw materials producers of deliberately shutting down production to keep prices high, invoking force majeure as an excuse. "A complete farce," snorted one converter, who declined to have his name mentioned, fearing his polymer supply would be cut off completely.