Commodity resin prices warm up in June

North American commodity resin prices followed temperatures upward in June.

Average selling prices for most materials in that category increased during the month, as demand rebounded from the impact of the COVID-19 pandemic. Higher raw material prices also played a role in the hikes, which lifted prices for polyethylene, polypropylene, suspension PVC, solid polystyrene and PET bottle resin.

Global prices for crude oil, a global plastics price-setter, also have increased. Oil prices "have remained incredibly supportive as a result of both international and domestic supply cuts," according to a recent report from Blue Clover Polymer Solutions in Princeton, N.J.

"In the world of crude oil supply, like all commodities, what goes up in supply must also come down," officials said in the report. "And after having incredible supply come to the market over the past several years to meet the surging demand, a significant percentage of that supply is now off line to adjust for the loss of demand from COVID-19."

Regional PE prices moved up 4 cents per pound in June after being flat in May. The 4-cent June hike essentially negates a 4-cent price drop from April. Market sources said strong packaging demand during the pandemic helped drive overall PE demand in June. Demand also rose in general with businesses reopening in some parts of the United States.

North American PE supplies will be improved by Dow Inc."s plans to restart two PE units in Texas by the end of July. Those lines — and a line in Argentina — had been down since early May in response to the COVID-19 crisis. The line in Bahia Blanca, Argentina, restarted earlier this month. The Texas lines are in Freeport and Seadrift.

A major high density PE line operated by Formosa Plastics Corp. USA remains out of production. That 1.5 billion-pound-capacity unit in Point Comfort, Texas, will shut down for maintenance from July to early September, according to industry reports. A smaller Formosa unit with 440 million pounds of capacity making grades for blow molding also is closed for maintenance.

North American PP prices ticked up 1 cent per pound in June. Prices had been flat in May after falling 2 cents in April. Sources said higher raw material prices played a role in the June increase.

The automotive, construction and appliance markets had been using less PP. But the COVID-19 outbreak is creating higher PP demand for medical uses, such as N95 face masks, which are needed to protect health care providers.

North American PP supplies were improved in late June, when Braskem SA completed construction of a new PP resin plant in La Porte, Texas. Officials with São Paulo-based Braskem said that the billion-pound-capacity plant is the first new PP facility built in North America since 2003. They added that the plant has global export capacity to serve clients worldwide.

The 50-employee plant can make Braskem"s full range of PP resins, homopolymer, impact copolymer and random copolymer grades. Officials said the launch aligns with Braskem"s new global export hub in Charleston, S.C. That hub will be completed later this year and will have capacity to export up to 450 million pounds of PP and specialty polymers annually.

The commissioning process for the new plant is underway. Initial production test runs are expected to begin in the next month, with full-scale commercial production expected in the third quarter. Officials added PP demand improved in June and that Braskem"s North American PP outlook for the third quarter is positive as clients are ramping up operations and demand has rebounded.

Regional PVC prices jumped 3 cents per pound in June, negating a 3-cent price drop from May. Prices for the material also had declined by 5 cents in April. A market source told Plastics News that both domestic and export PVC sales improved in June.

Sales of PVC during the pandemic had been impacted by slower sales into construction, which accounts for more than half of PVC sales in the U.S. and Canada.

In the PS market, prices moved up 2 cents in June after sliding a total of 10 cents in April and May. Prices for benzene feedstock, which is used to make styrene monomer, were up slightly in June after tumbling more than 20 percent in May.

Prior to April, North American PS prices had been flat for five consecutive months. Demand has been solid in foodservice and food packaging, but it has not been strong in other sectors.

Regional PET bottle resin prices moved up an average of 1.5 cents per pound in June. Market sources said that increase had more to do with higher raw material prices, as demand for the material had been flat. Prices for PET had been flat in May after decreasing by a total of 9 cents in March and April.

Prices for Brent crude oil have rebounded from less than $20 per barrel in late April to more than $43 in early trading July 9. West Texas Intermediate oil prices began the year above $60 per barrel but crashed into negative territory on April 20. Prices for that material had recovered to almost $41 on July 9.

Prices for natural gas, used as a feedstock in North American PE and PVC, began the year at $2.19 per million British thermal units, but fell below $1.50 in late June. Prices had recovered to $1.82 in early trading July 9 but remained down almost 17 percent so far in 2020. The narrowing of the gap between crude oil and natural gas has lowered profit margins for North American resin makers.

source : https://www.plasticsnews.com/news/commodity-resin-prices-warm-june

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