US raw material PS, PP, PE resin prices rise again

Late-summer pricing run-ups continued to hit the polystyrene, polypropylene and polyethylene markets in August and September. In PS, producers have hammered through 8 cents of a proposed 16 cents for August and September. They’re still working on the other 8 cents, according to several buyers contacted recently.

PS prices have been affected heavily by prices of benzene, a raw material used to make styrene monomer feedstock. Limited supplies of benzene are available from oil refineries, and this year’s increase in demand for products derived from benzene has tightened the chain even more.

Recent benzene prices have been around $4 per gallon — an amount roughly four times its historic average. Most North American PS makers buy at least half of the benzene they need to make their PS product.

The recent hikes have raised the amount of total increases for 2004 to an average of 18 cents per pound. On injection molding grades of high-impact PS, that equals a price boost of almost 30 percent.

Overall U.S./Canadian PS sales — including expandable PS — were up almost 5 percent in the first half of 2004, according to the American Plastics Council in Arlington, Va. EPS accounted for most of this growth with a gain of almost 16 percent. Outside of EPS, U.S./Canadian PS sales growth in the first half was about 3 percent.

PP prices are up another 3 cents per pound since Sept. 1. A number of PP makers have said they’re still trying to get caught up with high raw material costs based on natural gas and crude oil price increases that occurred earlier this year.

“The demand picture has been really good, but we’re still working to even things up on the raw material side,” one PP executive said. West Texas Intermediate crude oil was trading at $47 per barrel Sept. 21 — a jump of almost 75 percent vs. its year-ago level. Natural gas was at $5.40 per million Btu, a 20 percent bump in the same comparison.

In North America, about half of all propylene monomer feedstock is derived from crude oil, with the rest coming from natural gas. First-half U.S./Canadian PP sales were up almost 9 percent, APC said. Taking out the massive 29 percent growth rate enjoyed by export sales leaves the domestic PP market with year-on-year growth of almost 7 percent.

PP sales into injection molded cups and containers were up 20 percent in the first half. Other top growth areas included sheet (up 13 percent) and combined sales to resellers, distributors and compounders (up 12 percent).

In total, North American PP prices have soared an average of 16 cents per pound so far in 2004. For injection molding grades of homopolymer PP, that works out to an average increase of 33 percent. The story in PE is similar to that of PP, as massive raw material price increases have not quite been offset by gains in resin pricing, according to several producers contacted recently.

The result was another 5 cents in price increases taking hold in September. Year-to-date PE price increases now are at 15 cents per pound on average. “The [September] increase stuck on the resin side,” a Colorado-based PE buyer said. “But we’re having a tougher time passing this one on than we did with the increases earlier in the year.”

Strong demand growth again played a role in pushing the September increase through, with first-half U.S./Canadian high density PE sales up almost 11 percent, low density PE up almost 6 percent and linear LDPE up 5 percent, according to APC. First-half export growth also played a major part in overall growth for HDPE (up 26 percent) and LDPE (up 13 percent). LLDPE export growth was more modest at 2 percent.