Price Hikes Hit Scary Levels

Tag : homopolymer resin


[ Resin Pricing Chart ]
The athletes in Beijing aren’t the only ones taking recordleaps this summer. PVC producers asked for a startling 8¢/lbincrease; PS prices ticked upward at two-week intervals; PP soaredby double digits, as did several engineering resins; and LCPsscored a triple-digit climb. In nearly all cases, the cause was notsupply or demand, but underlying costs of feedstocks, energy,transportation, and even packaging.
PE PRICES UP SHARPLY
Polyethylene prices moved up 5¢/lb in June, bringing to11¢ the total increases implemented since January. Last month,suppliers were also intent on getting a 7¢ hike dated July 1and they posted an 8¢ increase for Aug. 1. The London MetalExchange (LME) North American short-term futures contract in blownfilm butene LLDPE also jumped from July’s 73¢ to79.5¢/lb for August.
Contributing factors: The 7¢ July hike is likely to be implemented in full, as wasthe June increase, according to Mike Burns, global businessdirector for PE at resin purchasing consultant Resin Technology,Inc. (RTI), Fort Worth, Texas. He notes that June contracts forethylene monomer rose 5¢ to 70¢/lb. That adds up to9¢ since January. But bids for July monomer contracts roseanother 7¢ to 13¢/lb.
Domestic demand continues to be soft, and industry estimatespredict a 2% to 6% decline for the first half of this year. Exportsare still taking up much of the slack, but most industry expertslook for exports to soften soon.
PP ROCKET UPWARD
Polypropylene prices moved up 6¢ to 7¢/lb in June, apartial implementation of that month’s 8¢ hike. For July1, PP suppliers issued unprecedented price hikes totaling17¢/lb, 2¢ of which is a surcharge for transportation andutility costs. LME’s August North American short-term futurescontract for g-p injection-grade homopolymer soared to 91.2¢from July’s 78.9¢/lb.
Contributing factors: PP resin tabs have closely tracked rising monomer costs. Junepropylene contracts moved up 6¢/lb and July contract bidsranged 8¢ to 15¢ higher. “Monomer inventories arelow and the market is tight. This will continue until propyleneprices are high enough to justify more monomer production,”ventures Scott Newell, director of client services at RTI.
Domestic demand for PP continues to be in a slump, with industrystatistics showing a 5% drop through May. While PP export demandstarted the year above historical highs, it has dropped drasticallyin the last few months due to the cost of monomer, according toRTI’s Newell. PP plant utilization rates are said to bearound 85% or perhaps lower. Suppliers have shuttered oldercapacity and throttled back production, thereby trimminginventories to 30 to 35 days, from the usual 38 to 40 days.
PET PRICES UP
PET prices moved up 8¢ to 10¢/lb by the end of June,reflecting partial implementation of price hikes for April, May,and June totaling 12¢/lb. Meanwhile, suppliers were aiming toimplement a 7¢ increase for July 1.
Contributing factors: Feedstocks were up 13¢ between March and April alone, andenergy and transportation costs for PET producers rose 1.5¢ to3¢, according to one leading supplier. Price of paraxyleneprecursor, at 58.25¢/lb in March, was headed to 71.5¢ forJune. Projections for July contracts were around 78¢/lb. Saidone supplier, “We are trying to explain to our customers thatthese are unprecedented times and that this surge in feedstock,energy, and transportation costs is here for the long run.”
RECORD PVC HIKE POSTED
All PVC resin producers added 4¢ to previously announced4¢ hikes for July 1, adding up to a record-high 8¢/lbprice increase, at least half of which is expected to stick. Spotprices are already up 8¢. This follows a 4¢ increase inMay and June.
Contributing factors: Ethylene monomer contract prices for June still had not settled inmid-July, but producers said there would be an increase of 5¢to 15¢/lb. PVC demand through May was down 12.7%; pipe resindropped 20.7%; and consumption in windows was off 6.5%.
TWICE-A-MONTH PS HIKES
The three big PS producers, Total, Ineos, and Americas Styrenics,announced staggered price increases of 12¢ to 14¢/lb forcrystal and HIPS between mid-June and Aug. 1. Although theirschedules varied, all three suppliers ended up raising prices attwo-week intervals. What’s more, the spread between crystalwidened to an unaccustomed gap of 4¢/lb.
Contributing factors: PS demand is fairly good, especially in packaging. But HIPS supplywill stay very tight for at least the next two months because therubber ingredient is on allocation.
OTHER RESIN INCREASES
BASF’s Styrolux and Styroclear SBC resins went up 6¢/lbon July 7 after rising a similar amount in June.
Bayer MaterialScience lifted tabs on PC and PC/ABS grades by around10¢ to 15¢/lb in mid-June.
DSM raised injection molding and specialty grades of nylon 6 and 66by 20¢/lb last month, while extrusion grades rose only12¢.
Lubrizol hiked Estane and other aromatic TPUs by 21¢/lb July15, but Tecoflex aliphatics went up 15¢.
Ticona’s Vectra A LCPs cost $1.60/lb more on Aug. 1. Allother Vectra grades rose $1.15/lb.
Unsaturated polyesters, vinyl esters, and gel coats from Reichhold,CCP, and AOC cost 8¢/lb more this month. AOC added 2¢ andCCP 4¢ more to drum shipments because of the rising cost ofsteel.