Spot polyethylene (PE) added $0.02-$0.03/lb amid higher monomer costs and light supplies, according to Michael Greenberg, CEO of The Plastics Exchange. Some resin-allocation measures were instituted due to production issues at the resin and steam cracker levels. Although average PE contract prices rose $0.05/lb in June, spot prices rose by an average of $0.07/lb as supplies became scarce at months end. The price raising wont relent in the new month, with processors facing another $0.07/lb price increase for July contracts and an additional $0.08/lb increase being weighed for August. Greenberg says the ethylene market is trading near its historic highs, and with ethylene contract prices not yet settled for June, increases as high as $0.15/lb have been issued for July. Greenberg said that each higher spot ethylene trade sends a ripple through the resin market. Growing demand for PE from Asian traders sustained export sales as European traders left the market. Converters have so far largely dealt with the inflation, but for how long? Higher prices and damaged margins have placed financial strain on many processors, Greenberg said, and their sustainability is a concern, especially for smaller shops.
Even at $0.90/lb and higher, fresh railcars of spot polypropylene (PP) disappear as soon as they hit the market, according to Greenberg. Thats due in part to the fact that contracts added $0.08/lb in June and could see an increase to July resin contracts between $0.08 and $0.18/lb depending on July propylene contract settlements. Greenberg says that in addition to tying PP prices directly to the monomer, producers have responded to higher costs by cutting production, with PP operating rates just below 90% for much of 2008 but with some plants closer to 80%.
Spot polystyrene (PS) prices continued to climb, adding another $0.02/lb. Spot activity was low due to very limited supplies, with few good offgrade railcars even seen, according to Greenberg. Average PS contracts rose $0.04/lb for general purpose and $0.06/lb for high impact in June. Producers want to add another $0.03 to $0.04/lb for July contracts, but on the plus side, benzene prices have stabilized, according to The PetroChem Wire.