Plastics Technology

MAY 2012

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resin buying strategies Price Relief in Commodity Resins Prices of the four major commodity thermo- plastics rose through the first quarter, driven principally by feedstock cost increases and tighter supply/demand due to lengthy planned maintenance outages. For PVC, add a real uptick in domestic demand during an unusually moderate winter season. While the second quarter is usually a stronger period for de- mand growth with firmer resin pricing, a combination of slowed global demand, build-up in resin suppliers' inventories, and pro- jected drops in feedstock prices are expected to provide some price relief at least through the second quarter. These observa- tions and other projections of what's ahead were gleaned from consultants at Resin Technology Inc. (RTi) of Fort Worth, Texas (, and Michael Greenberg, CEO of Chicago-based The Plastics Exchange ( PE PRICES LIKELY TO SOFTEN Polyethylene prices rose 3¢/lb in March from implementation of the second half of the January increase. Suppliers were still seek- ing additional increases totaling 7¢/lb, but market fundamentals appeared not to support higher PE prices. Although spot ethylene monomer prices briefly spiked in early April, due to a very short unexpected outage at the Williams cracker in Geismar, La., prices then dropped back to about their starting level of 68¢/lb. Accord- ing to Greenberg, ethylene prices should ease upon the completion of all the maintenance turnarounds in May. "Third quarter ethyl- ene was only in the high-50¢/lb range, and monomer for delivery in the fourth quarter is steeply discounted." Notes Mike Burns, v.p. of PE at RTi, "In the last four years, exports accounted for 25% to 30% of domestic PE production. Export volume has now dropped to 17% or less." Suppliers have not throttled back on production and Burns says inventories are building. "While the market is still relatively balanced in mid- April, growing inventories could soon make for an oversupplied market," he notes. Because of recent PE price volatility, processors have contin- ued wisely to buy only "as needed." Price fluctuations in 2011, coupled with episodes of pre-buying, made it difficult to be certain about last year's "real" PE demand, explains Burns. PE demand did grow by 3% to 4% in 2011, and there is potential for similar growth in 2012. Lower feedstock costs and steady demand are expected to cause downward price pressure starting this month. MARKET PRICES EFFECTIVE MID-APRIL 2012 (Source: Plastics Technology) Resin Grade POLYETHYLENE (RAILCAR) LDPE, LINER LLDPE, BUTENE, FILM NYMEX 'FINANCIAL' FUTURES HDPE, G-P INJECTION HDPE, BLOW MOLDING NYMEX 'FINANCIAL' FUTURES HDPE, HMW FILM POLYPROPYLENE (RAILCAR) G-P HOMOPOLYMER, INJECTION NYMEX CALENDAR FUTURES IMPACT COPOLYMER POLYSTYRENE (RAILCAR) G-P CRYSTAL HIPS PVC RESIN (RAILCAR) G-P HOMOPOLYMER PIPE GRADE ¢/lb 92-94 78-80 NA 80-82 79-82 63.9 90-93 96.6-98.6 75.9 98.5-105 87-89 97-99 64-66 61-63 POLYETHYLENE PRICE TRENDS HDPE Injection HDPE Blow Molding MAR APR 3¢/lb MAR 3¢/lb MAR 3¢/lb APR HDPE HMW MAR © © © 3¢/lb LDPE APR MAR 3¢/lb FLAT PP PRICES AHEAD? Polypropylene prices seem to have peaked after spiking upward more than 21.5¢/lb in the first quarter, moving in step with propylene monomer prices. Despite suppliers' efforts to raise monomer contract prices by 2¢ to 5¢/lb for April, it was consid- ered likely that monomer and PP prices wouldn't budge. Scott Newell, director of client services for PP at RTi, ventures that prices would be close to flat (± 1¢) and could even decline as market demand slows. Greenberg notes that PP contract prices will PLASTICS TECHNOLOGY MAY 2012 65 APR §¨ §¨ §¨ LLDPE Butene APR © §¨ © §¨

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