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Prices for PP, PVC fall in May

Date:2017-08-28 14:28:06View:

North American selling prices for polypropylene have plummeted since May 1, with suspension PVC prices making a smaller drop as well.

The PP number is down an average of 12 cents per pound, and suspension PVC has fallen an average of 4 cents, according to buyers and market watchers contacted recently by Plastics News. That represents a one-month drop of almost 11 percent for PP and almost 5 percent for PVC, according to the PN resin pricing chart.

Prior to the May decreases, regional PP prices had increased 22 cents per pounds since Jan. 1, with suspension PVC up an average of 10 cents. The PP move represented a 24 percent increase on injection molding grades of homopolymer PP. The four-month PVC increase was around 13 percent on pipe grades of suspension PVC.

Increased supplies of propylene monomer feedstock fueled the PP drop, according to Scott Newell, a market analyst with Resin Technology Inc. in Fort Worth, Texas.

“Propylene had become very high-priced because of tightness in the market,” Newell said by phone May 27. “Then some supply came back and demand suffered because of it.”

“One of the big problems [with the earlier propylene tightness] was the combination of refinery and steam crackers being down earlier this year,” he added. “A lot of capacity was out, and that combined with attractive ethane cracking and supplies got tight.”

Crude oil-based naphtha also was being used as a feedstock — as opposed to lower-priced natural gas-based ethane — because prices of by-products such as benzene and butadiene were up, making naphtha more profitable.

PP demand also dropped in April and mat after enjoying a strong first quarter of 2010. North American PP sales were up almost 5 percent during the quarter, according to the American Chemistry Council in Arlington, Va. Domestic sales were up more than 13 percent, but export sales nose-dived more than 50 percent.

With domestic demand off these last two months — and exports still in a ditch — PP prices were left with nowhere to go but down. June could be a tough month as well, with additional price decreases possible, sources said.

The May PP price drop “is huge, but it shows how overpriced we were because of how tight monomer was,” Newell said. “It’s hard to say how this [volatility] might affect long-term prospects for polypropylene, but if you’re someone looking to get into PP, you might have second thoughts.”

In PVC, recent price drops in ethylene feedstock sent prices down in May. Sources said sales seemed to slow a bit after a strong first quarter. U.S./Canadian PVC sales were up almost 18 percent in the first quarter, thanks largely to growth of more than 55 percent in exports.

Domestic PVC sales were up almost 7 percent, but almost all of that growth can be attributed to the resellers and compounders segment, which bought almost 100 million more pounds in the first quarter of 2010 than it did in the year-ago period.

Sales in PVC’s dominant rigid pipe and tubing segment grew almost 4 percent during the quarter, but sales into siding-related uses basically were flat. Other construction-related uses continued to struggle, with sales into extruded windows and doors down almost 2 percent and sales into fencing and decking off more than 11 percent.

Construction markets accounted for more than 60 percent of domestic PVC sales in the first quarter. There was some good news on that front from the National Association of Home Builders, which recently reported that U.S. housing starts in April were up almost 6 percent from March and up more than 40 percent from the same month in 2009.

But to put the market in perspective, April’s annualized rate of 672,000 housing starts remains one-third less than the level of April 2008, which checked in at just over one million. U.S. housing starts for full-year 2009 were 554,000 — a towering drop of 73 percent vs. 2005, when almost 2.1 million housing starts were recorded.



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