TPE resin pricing: PE, PP, and PS higher

Spot supplies of polyethylene (PE) were tight last week, according to Michael Greenberg, CEO of spot platform The Plastics Exchange (TPE; http://www.theplasticsexchange.com), with cars that were available already priced $0.05/lb higher, reflecting the increase nominated for June contract prices. Processors have shied away from these higher prices, turning to resellers and distributors who built up inventories at the end of May and are offering PE priced $0.02 to $0.03/lb higher. Greenberg says that in spite of a relative dearth of fresh PE railcars on the spot market, trading volume has been strong, with the higher prime prices are pushing many processors to offgrade and recycled materials. In the export market, Asian demand has stepped in for lagging European interest, with continued opportunities in South America. Greenberg says with margins squeezed, producers are lowering operating rates, and production levels in 2008 are down from 95.5% to 91.9%. Meanwhile, sales to the export market have climbed from 20.8% to 22.8%. Greenberg says PE price increases of $0.05/lb for June and July, with some suppliers seeking $0.07/lb, will keep the spot PE market quite active.

Polypropylene (PP) spot prices climbed $0.02/lb due to limited offerings and climbing demand, with producers seeking increases of $0.06 to $0.08/lb on June resin contracts to counteract climbing feedstock costs. Greenberg summarizes the PP market’s current challenges thusly, “Production margins are slim, operating rates have been reduced, and export options are few.” In exports, there does remain a steady stream of sales to Mexico and South America, with Asian traders seeking lower-end material and European traders inquiring after prime product. Upstream, Greenberg says crackers are favoring light feeds, which is limiting the amount of propylene manufactured and pushing polymer-grade propylene (PGP) contract prices higher. June settlements are seen with anywhere from a $0.06 to a $0.08/lb increase, according to The PetroChemWire (http://www.petrochemwire.com). Here too operating rates have dropped, with producers running below 90% through 2008.

Greenberg describes the state of polystyrene (PS) supply as rationed, with spot PS supplies low in a rising market. Specifically, Greenberg says there are few well-priced high-impact cars available, with general-purpose cars absent as well. Spot PS prices climbed an average of $0.03/lb in May, with prices already up another $0.02/lb in June. Producers have nominated a $0.04/lb increase for general-purpose contracts in June, with an additional $0.03/lb planned for July. Steeper increases, totaling $0.10/lb between June and July, have been nominated for high-impact PS. Greenberg believes that higher costs and tight supplies will mean PS producers should be able to continue passing through rising energy and feedstock costs.