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Feedstocks Drive Up Prices

Posted by: Mu Ju 2019-10-30 Comments Off on Feedstocks Drive Up Prices

Prices of all sorts of commodity and engineering thermoplastics and thermosets are rising by leaps and bounds, reacting to equally strong increases in feedstock costs.

PE prices moved up 3¢/lb in May, after a 3¢ increase in April. A 5¢ hike slated for June was working its way into the market, and a 7¢ increase was announced for July 1. Meanwhile, the London Metal Exchange (LME) North American short-term futures contract for July in blown film butene LLDPE was 73¢/lb, a big jump from June’s 68.5¢/lb.

Contributing factors: It’s likely that the June 5¢ hike will be fully implemented, according to Mike Burns, global business director for PE at resin purchasing consultant Resin Technology, Inc. (RTI), Fort Worth, Texas. Continued increases in feedstock costs and low resin inventories are supporting factors. April-May contracts for ethylene monomer moved up a total of 4¢/lb, and there were bids for at least a 5¢ increase in June.

Domestic PE demand remains lackluster, but HDPE supply is still extremely tight. According to Burns, one factor was Nova Chemicals’ unexpected delay in starting up a new plant after shuttering an older one. Export demand is down from last year but still above historical levels, owing partly to the weak dollar. A PE plant explosion in China has renewed export opportunities here.

Polypropylene prices moved up 4¢/lb by June 1, although suppliers had posted a 5¢ hike. New hikes were announced in May for June 1, which started out at 5¢/lb but ended up at 8¢/lb. The July LME North American short-term futures contract for g-p injection-grade homopolymer sold for 78.9¢/lb, up from June’s 73.9¢.

Contributing factors: The resin hikes are linked directly to soaring feedstock prices. Propylene monomer contracts in May moved up 4¢ to 69¢/lb, and June contracts were up 6¢ to a historical peak of 75¢/lb. Cindy Bryan, director of market research at RTI, predicts that PP suppliers will probably get 6¢/lb out of their 8¢ June hikes.

Domestic PP demand is still down and U.S. PP exports to most parts of the world have dropped significantly. Says RTI’s Bryan, “Propylene monomer prices are too high, making PP exports cost-prohibitive, and there is competition with exports from Europe and the Middle East.” Meanwhile, PP suppliers have curtailed production, reducing their inventories to about 36 to 38 days, vs. the usual 40-45 days.

Resin supplies are expected to tighten over the next two months, as both Formosa Plastics and LyondellBasell have suffered mechanical breakdowns and utility supply distruptions. Formosa declared force majeure on all of its PP products, which was estimated to result in a 15% reduction of its PP shipments in at least June and July. LyondellBasell did not declare force majeure, but said that severe production problems at both its Bayport, Texas, and Lake Charles, La., PP plants, resulted in its having to fill resin orders from inventory. The company has suspended spot and other non-contract sales.

PET prices were up as much as 4¢/lb in May as suppliers sought to implement a 4¢ increase after pushing through the April 5¢ hike. Meanwhile, a 3¢/lb increase for June 1 and 5¢ for July 1 were also in the works.

Contributing factors: The increases are driven by rising prices of feedstocks. While ethylene glycol prices leveled out after having risen significantly in the first quarter, prices of the more critical paraxylene component keep going up. From December through May, paraxylene prices rose 10¢/lb. Industry sources project further price increases because paraxylene follows crude oil prices, and its supply is tight. Meanwhile, PET resin supply is loose due to lackluster demand and new capacity that came on stream in the last year.

In mid June, the 4¢ increase supported by all resin producers for May 1 still hadn’t settled. Buyers and sellers alike were awaiting the CDI price index to come out later in June, since Many PVC contract prices are pegged to it. Resin producers say the 4¢ is solid for May shipments. Processors, however, want 2¢ in May and 2¢ in June. Georgia Gulf, Formosa, and OxyChem announced a 4¢ hike for July 1. Shintech is expected to go along.

Contributing factors: Feedstocks are soaring. Ethylene monomer, which hadn’t settled for May at press time, may rise over 5¢/lb.

PS market prices were expected to rise 4¢ for GP and high-heat grades and 6¢ for HIPS as of June 1. On top of that, Ineos and Total announced a 5¢ increase on all PS grades for June 15, while America’s Styrenics posted a 3¢ hike on GP and 4¢ on HIPS for July 1.

Contributing factors: Demand for PS is still weak. But PS is made from benzene and ethylene. Benzene settled at $4.31 for May, up from $3.87 in April. Ethylene prices are on the upswing, too.

DuPont posted a 20¢/lb increase for all standard nylon resins and even bigger hikes for specialty resins, effective July 1. This comes on top of a 12¢ increase May 1. DuPont also hiked acetals 10¢/lb and polyesters 15¢/lb on July 1.

Ticona announced price increases and a transportation surcharge for June 16: Acetal, PBT, PET, and copolyester TPE are up 10¢. Celstran long-fiber products are up 7¢, and LCPs gained 35¢ to 45¢/lb. GUR UHMW-PE rose 20%.

Solutia hiked nylon 66 10% July 1.

BASF hiked styrenic copolymers 6¢/lb on July 1. This includes ABS, SAN, ASA, MABS, and nylon/ABS alloys. Meanwhile, Styrolux and Styroclean SBCs were up 6¢ on June 16.

Huntsman raised epoxies 8% July 1.

AOC hiked unsaturated polyester and vinyl ester resins by 10¢/lb on June 30 and tacked on a 4¢/lb surcharge for products in steel drums.

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