Plastics Technology

JAN 2019

Plastics Technology - Dedicated to improving Plastics Processing.

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? and benzene, implied styrene monomer production costs were 26¢/lb in early December, down from 33-34¢ in October. Actual spot monomer prices dropped by 62¢ to 39¢/lb in that time frame. Chesshier anticipated that PS prices in January would be flat, but the first quarter could see some upward pricing pressure driven by feed- stock prices rebounding—e.g., benzene is seen as underpriced—along with the ever-present possibility of unplanned feedstock outages. PVC PRICES FLAT TO DOWN PVC prices were flat in November, but suppliers called for a 2¢/lb increase for December. Mark Kallman, RTi's v.p. of PVC and engineering resin markets, and PCW senior editor Donna Todd both saw this hike as unlikely to succeed. Todd reported that the price hike was viewed very unfavorably by resin buyers. "For one thing, December price increases—the last of which occurred in December 1988—don't work. Demand is at the lowest point of the year, meaning processors have no incentive to pay more for resin they don't need." Characterizing the price-hike announce- ment as a "bargaining chip," Kallman did not expect the increase to be realized. While spot ethylene prices rose very slightly in November, ethane prices were dropping, and late-settling November ethylene contracts were expected to remain flat or drop by 1¢/lb or so. "There are no supporting feed- stock costs for a PVC price hike, along with falling global ethylene prices due to low crude-oil prices," Kallman said. He ventured that PVC contract prices this month would be flat and more likely down as negotiations concluded. He expected some upward pressure in February and March due to planned plant shutdowns. PET PRICES HEADING DOWN Prices for domestic bottle-grade PET were in a wide range of 68¢ to 75¢/lb in early December, for domestic and import, truckload and bulk truckload (48,000 lb), according to PCW senior editor Xavier Cronin. The lower end was for higher-volume deliveries, including railcars (190,000 lb) to Midwest locations. This compared with the narrower range of 70-72¢/lb through most of November. Cronin reported that PET prices were poised to drop 2-3¢/lb in December as the cold-weather season in most of the U.S. kicked in, and demand for soft drinks and water in PET bottles dropped off. At the same time, there was increased demand for both PET and HDPE for bottle production in California due to the wildfires that devastated the state in November. This was expected to increase prices for PET in West Coast markets by January as inventories at bottle-producing plants are used up. December, according to Scott Newell, RTi's v.p. of PP markets. Moreover, all industry sources anticipated monomer contracts to settle at least 5¢/lb lower in December. While he expected PP prices to follow, Newell noted that PP suppliers had issued margin increases of 3¢/lb for last month. "Our cur- rent expectation is that some of that 3¢/lb margin has the potential to go through. We have been the highest priced in the world for both monomer and PP, and demand destruc- tion took place. At the same time, propylene monomer supply has grown significantly— PP prices are now correcting." PCW's Barry said he was on the fence about whether suppliers would be able to get any margin increase, citing plenty of low-cost PP imports and ample spot PP spot material available domestically, contra- dicting the tightness claimed by suppliers. He ventured that PP prices would be flat to higher in the first quarter, based on historical buying trends, which predict strong demand from processors who managed their year-end inventories, particularly at lower prices. Newell noted that with domestic PP prices coming down, PP imports will not look as attractive in 2019. "PP prices had the potential to move quite a bit lower than what the industry may have expected due to new market dynamics—oil at $50/bbl, which made heavy feeds like propylene become more attractive to produce, adding to an already built-up monomer supply." Characterizing PP spot-market activity as very robust going into December, Greenberg reported, "The sharp and swift market correc- tion has shut down the import arbitrage; therefore, we expect much fewer speculative pounds inbound during December, which could eventually lead to a lack of PP supply early in the New Year." These sources also see the potential for price volatility arising from oil price movements and cold-weather plant disruptions. PS PRICES DOWN Polystyrene prices held even in November, but there were industry reports that suppliers were offering price concessions of up to 7¢/ lb in December. According to PCW's Barry and Robin Chesshier, RTi's v.p. of PE, PS and nylon 6 markets, price discounts should have been even greater, consid- ering the double-digit price decline of both benzene and butadiene feedstocks, along with a drop of at least 7¢/lb that was expected for styrene monomer. Barry reported that based on falling benzene costs, spot prime PS prices were expected to fall at least 5¢/lb in December. Based on a 30/70 formula of spot ethylene PVC Price Trends Pipe NOV DEC Gen. Purpose NOV DEC Polystyrene Price Trends GPPS NOV DEC HIPS NOV DEC PET Price Trends Bottle Grade NOV DEC 2-3¢/lb 2-3¢/lb Polypropylene Price Trends Homopolymer NOV DEC Copolymer NOV DEC 10¢/lb 10¢/lb 48 JANUARY 2019 Plastics Technology YO U R B U S I N E S S Resin Pricing Analy sis

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