The commodity resin markets were a bit busier last week, although demand remained somewhat unenthusiastic and supply was still spotty, according to the PlasticsExchange in its Market Update.
|Image courtesy Cool Design/|
Commodity resin prices rose a cent across the board this past week, as suppliers raised their levels amid March price increase efforts. Polyethylene (PE) producers implemented their $0.05/lb increase in February and are seeking to pad margins with another $0.06/lb for March. Polypropylene (PP) contracts jumped a whopping $0.165/lb in January and February, and producers are looking to pass through their increase in March propylene contracts.
The PE market edged up $0.01/lb in the middle of the week. With the February nickel intact, producers lifted spot asking prices by at least $0.03/lb, as they worked on their March $0.06/lb increase. Contract orders are being requested up $0.06/lb; to encourage submission, they are price protected should the increase not take hold. Some resellers with inventory, who have been struggling with weak demand, kept offers flat to secure sales; others asked for another penny or two more.
Incredulous PE buyers, especially those that pre-bought heavily in December and January, have been holding off on major purchases, looking to avoid what they view as seasonal peak pricing. In the meantime, congestion in the Houston area from the massive year-end export surge is finally clearing, making way for another purge, if necessary, to tighten supply in the domestic market. When initially nominated, the March increase seemed only to reinforce the February hike, but at this point it has the potential for at least partial implementation, notes the PlasticsExchange, adding that stranger things have happened.
PP activity was better than usual, with demand coming in a series of spurts as processors found themselves short of material. Spot prices continued to rise, as another increase appeared imminent for March. The market is not absent of material—in fact, there is relatively good liquidity across most commodity grades. Prices simply continue to rally based on producer cost-push pressures and reseller replacement costs. Based on current spot monomer levels, another $0.05 to 0.07/lb increase could be nominated for PGP and PP contracts. Buyers are becoming re-acclimated to PP in the $0.50 and $0.60/lb range, but we’ve been here and much higher before.
Gone is that brief period of supply/demand-driven negotiated PP pricing. As rapidly rising feedstock costs need to be passed downstream on to resin, increases commensurate with the change in monomer have again become the producer’s friend. Soaring U.S. PP prices have again encouraged the practice of imported material. However, resellers that were caught when the market turned sharply lower almost a year ago have become more cautious with the magnitude of their speculative buys. Still, the import arbitrage is wide open and it does not seem that the domestic PP rally’s peak is in sight.
Read the full Market Update on the PlasticsExchange website.
Styrene price surge will continue into first half of 2017
Manufacturers of plastic packaging have been faced with a price surge in styrene across the board since the fourth quarter of 2016, write Elipso and IK, industry associations that represent plastic and flexible packaging manufacturers, respectively, in France and Germany.
There has been a dramatic increase in the price of polystyrene, which achieved an all-time high in February, the associations note in a joint press release published today. The price of EPS also has increased dramatically despite moderately priced crude oil.
The source of the problem lies with greatly reduced capacities in the refinery sector because of maintenance work at plants in North America and Asia, according to Elipso and IK. The impact is global and it is “currently impossible to predict a turnaround,” write the associations, which forecast high raw material prices through the first half of 2017.
IK and Elipso concur that the situation is dramatic for processing companies. “The integrated primary producers, in particular, urgently need to bring about an improvement in this unfortunate situation. Sound economic judgement is vital when considering the way forward,” they note.