North American prices for most major commodity resins increased in February, as tight supplies and higher feedstock costs provided leverage for suppliers to take those steps.
Price hikes hit markets for polyethylene, polypropylene, PVC, solid polystyrene and PET bottle resin, according to market sources contacted by Plastics News. These changes have been shown on the PN resin pricing chart.
Prices for all grades of PE surged 5 cents per pound in February. That hike "was a bit of a rebound from the decreases from the end of last year," according to David Barry, a market analyst with the PetroChem Wire consulting firm in Houston.
"January [PE] demand sounds like it was very strong, even though there wasn't much export activity," he said. "And February started with a lot of spot [sales] activity, although that slowed down later in the month."
Regional PE prices had been flat in January but a February price increase was expected because of higher prices for ethylene feedstock. PE prices fell an average of 2 cents per pound in December, but were up a net of 4 cents for full-year 2016. PE makers now are seeking increases of 6 cents per pound set for this month.
North American PP prices jumped 6.5 cents in February, following an increase for polymer-grade propylene feedstock. It's the second straight significant monthly price increase for PP resin, following a 10-cent jump in January.
These moves are a sharp reversal from a combined 11.5 cents in price drops that the market had seen in the last three months of 2016. More hikes could be in store for March, sources said, as propylene remains in tight supply.
"Propylene inventory could be at a historical low by the end of March," one major U.S. PP buyer told PN. "This doesn't bode well for propylene pricing coming down quickly."
The buyer added that refinery and steam cracker turnarounds "are hurting the situation, as well as economics not favoring butane or propane as feedstocks."
In the North American PVC market, the 4-cent February hike that took hold was expected, based on the same ethylene price movements that sent PE prices up. It was the first market movement for PVC since November, when producers essentially gave back a 2-cent increase they had won in October.
For full-year 2016, North American suspension PVC prices were up a net of 7 cents per pound. PVC sales in the U.S. and Canada enjoyed a solid year in 2016, growing more than 4 percent to more than 15 billion pounds, according to the American Chemistry Council. Domestic sales were up almost 4 percent, with exports up almost 6 percent.
Construction-related uses accounted for more than 63 percent of U.S./Canadian PVC sales in full-year 2016. U.S. housing starts grew almost 5 percent for the year to just under 1.17 million.
Higher North American prices for benzene feedstock, which is used to make styrene monomer, sent PS prices in the region up an average of 8 cents per pound in February. Regional benzene prices for the month were up 67 cents to $3.34 per gallon, a jump of 25 percent vs. January.
It's the second consecutive monthly price increase for PS in the region. Prices were up 5 cents per pound in January after being flat in December.
North American PS sales for full-year 2016 essentially were flat at just under 4.4 billion pounds, according to ACC. But the largest PS end market — food packaging and food service — saw sales growth of 1.3 percent, to more than 2.7 billion pounds.
For PET, a 1.5 cent increase in February also reflects higher prices for feedstocks such as paraxylene and purified terephthalic acid. PET bottle resin prices now have increased for six consecutive months.
Prices for the material were up 3 cents per pound in January. The six increases now have totaled 9.5 cents per pound.
Demand for PET from the bottled water market remains strong. That sector overtook carbonated soft drinks in the U.S. market for the first time in 2016, according to the Beverage Marketing Corp. consulting firm.
Higher benzene prices also sent regional prices for ABS resin up 8 cents per pound in February. North American ABS demand is estimated at around 1 billion pounds per year. February ABS prices also were affected by higher prices for acrylonitrile and butadiene feedstocks, sources said. ABS makers now are seeking further increases of 6 cents per pound for March and 5 cents per pound for April.