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Resin Pricing Outlook

ICIS analyst Jeremy Pafford recaps resin pricing trends in the first half of this year and outlines what might be ahead in the next six months.

Norbert Sparrow

July 22, 2022

3 Min Read
microphone and plastic resin
Images courtesy of Alamy/RTImages and 79MTK; template courtesy of Alamy

Now that we are in the second half of the year, it seemed like a good time to speak with ICIS analyst Jeremy Pafford about where resin pricing has been in the first six months of 2022 and where it might be headed. It’s a mixed bag, but the good news overall is that the resin markets may have peaked.

“Polyethylene probably has peaked, and you could see a slow decline the rest of the year,” according to Pafford, Head of North America, Market Development, at business intelligence firm ICIS. One of the major drivers of that reversal is increased capacity. “We’ll be adding three billion pounds of new capacity in the second half of this year. That inevitably will lead to some pressure on margins and could result in lower pricing,” said Pafford.

Polypropylene prices are on a similar trajectory. “They have been falling because of an ease in supply tightness of upstream propylene, which has been fairly weak, and that's another marketplace where we’re adding 2.15 billion pounds of capacity this year. That's also going to push on margins,” said Pafford.

It’s not exactly breaking news that polyethylene terephthalate (PET) resin prices have been soaring, but buyers might find some relief in that market, as well. “It seems like PET prices have gone up all the time,” noted Pafford. “But we may have hit a peak there, [and prices] will slowly tamp down through the rest of this year.” Then again, he added, PET has surprised us for the past year and a half.

Et tu, PVC? “We’ve had record high prices, and it feels like we finally hit a top there,” said Pafford. Again, capacity is playing a role, with record production in May of above 1.5 billion pounds in North America, he noted. Slackening downstream demand connected to the larger economy is also a contributor, according to Pafford.

How the global economy shakes out in the remainder of the year will have a direct impact on resin pricing going forward, said Pafford. Inflation and a reduction in consumer buying power will have a knock-on effect. Loosening demand will reverberate back through the supply chain and prices typically would fall back in a fairly uniform manner, said Pafford. But these are anything but typical times, and Pafford sees what he calls the “big squeeze” on the horizon that may reshuffle the economic deck.

Curious to know more? Then listen to my conversation with Pafford in this month’s Plastic Possibilities podcast.

 

About Jeremy Pafford

Pafford drives business development strategy for ICIS in the US, Mexico, and Canada and represents ICIS to chemical and polymer markets to showcase its expertise. He previously served as Managing Editor, Americas, for ICIS, leading the team analyzing chemical markets in the Americas and has authored research and presented at major events on topics such as the North American shale boom, US-China trade tensions, and how macroeconomic trends translate into chemical market trends.

About the Author(s)

Norbert Sparrow

Editor in chief of PlasticsToday since 2015, Norbert Sparrow has more than 30 years of editorial experience in business-to-business media. He studied journalism at the Centre Universitaire d'Etudes du Journalisme in Strasbourg, France, where he earned a master's degree.

www.linkedin.com/in/norbertsparrow

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