TPE resin pricing: PE and PP steady/higher, PS steady

Polyethylene (PE) producers are on track to achieve their proposed $0.03/lb price increase for May contracts, with spot prices up on average $0.015/lb halfway through May, according to Michael Greenberg, CEO of spot-trading platform The Plastics Exchange (TPE; Chicago). In light trading volume last week, Greenberg said all buyers are now seeing the proposed increase, with many of the small-to-midsize ones reluctantly paying. Upstream, ethylene has tracked higher than crude oil, in spite of the fact that it’s primarily derived from natural gas in North America, with this benefiting ethane-based ethylene producers who have seen their margins increase, as have fully integrated PE producers. Ethylene producers that use higher cost propane, butane, and natural gasoline have largely chosen to reduce operating rates and undertake incremental purchases of spot ethylene to fulfill orders, which has created a tight and rising ethylene market, according to Greenberg. Spot offerings have been light, with domestic generic prime steady and offgrade railcars up $0.01 to $0.02/lb over late April. Given high energy and feedstock costs, PE producers have issued another $0.05/lb price increase for June implementation.

Polypropylene (PP) prices didn’t slip last week, but they also failed to step higher, in spite of May polymer-grade propylene contracts posting a $0.04/lb price increase. Given that, Greenberg says PP producers are targeting price increases between $0.05 and $0.07/lb, in a bid to claw back margins, but a combination of higher prices and reduced demand could make that difficult. Refineries nationwide are operating at an average run rate of only 85%, which isn’t helping propylene’s situation, and poor economics for heavy-feed cracking ethylene producers have led them to reduce operating rates, which ultimately means less propylene by product. The above market conditions have led many processors to maintain tight resin inventories, with minimum purchases being made. Historically high petroleum prices continue to drive the market, according to Greenberg. “Oh for the days of $100/bbl Crude oil,” Greenberg said. “Amazingly that actually seems cheap today.”

Spot polystyrene (PS) prices held steady with average trading volume, with the end of May marking the three-month implementation of $0.07/lb in price increases. Benzene remains well above $4, with spot prices in the $4.12-$4.14/gal range, with a jump in butadiene also affecting high-impact PS (HIPS). In June, PS producers have issued further increases, seeking $0.04/lb for general-purpose PS and $0.06/lb for HIPS. On the spot market, offers have been light, with hopper cars of quality resin in the low-to-mid $0.80’s/lb and generic prime scarce. Greenberg notes that persistent consolidation among PS producers has finally matched output with demand and requires that processors maintain ample PS inventories so they’re not forced into last-minute high-priced purchases.