This downward trend is expected to continue, mainly due to lower demand, lower raw material costs and sufficient supply. #revaluation
Entering the fourth quarter, PE, PP, PS, PVC and PET prices have continued to fall since July, driven by a slowdown in demand, sufficient supply, declining raw material costs and general uncertainty in the global economy. In the case of polyethylene and polypropylene, the commissioning of significant new capacity is another factor, while competitively priced imports are a problem for PET and possibly polystyrene.
Here is the opinion of Michael Greenberg, Procurement Consultant at Resin Technology, Inc. (RTi), Senior Analyst at PetroChemWire (PCW), CEO of The Plastics Exchange, and Scott Newell, EVP Polyolefins at resin distributor and compounder Spartan Polymers. .
Despite polyethylene suppliers announcing price increases of 5-7 cents per pound in September-October, polyethylene prices fell at least 4 cents to 6 cents per pound in August and are expected to fall further in September, said David Barry. . PCW Associate Director of Polyethylene, Polystyrene, and Polystyrene Robin Chesshire, RTi Vice President of Polyethylene, Polystyrene, and Nylon-6 Markets, and Greenberg of Plastics Exchange. Instead, these sources generally believe that prices are likely to drop slightly in October and this month.
RTi’s Chesshire noted that demand for polyethylene remained strong for most of the year, but by the end of September it had declined in most market segments. PCW’s Barry noted that lower raw material costs, no signs of picking up demand and the opening of large new capacity from Shell will not push prices higher. He also noted that polyethylene spot prices fell 4 cents to 7 cents a pound as of September: “Export demand remains weak, traders have large inventories, and there is uncertainty about price movements in the coming month. is barely holding up as customers expect price cuts going forward.”
Sources also noted that suppliers have reduced production. In October, Greenberg described the spot market: “Most processors are still buying resin only as needed, and some processors are starting to buy more resin as prices become favourable, although consumer demand in many downstream industries has slowed due to for economic and economic conditions. Inflation worries Producers and other major resin suppliers continue to scoff at low rates as the bearish trend reverses, coupled with lower operating numbers and higher prices in Asia, on the assumption that this helped improve domestic demand as some buyers expressed concern about lost profits. big deals and cheap reserve prices.”
Polypropylene prices fell 1 cent/lb in August, while propylene monomer prices rose 2 cents/lb, but supplier margins fell 3 cents. According to Barry of PCW, Newell of Spartan Polymers and The Plastic Exchange, September prices for polypropylene fell a total of 8 cents a pound, settlement prices for monomer contracts fell 5 cents a pound, and suppliers lost another 3 cents due to for lower margins. lb. Greenberg. In addition, these sources believe that prices may again fall sharply in October, while prices have not changed or even decreased this month.
Barry sees a potential double-digit decline in October, citing subdued demand and oversupply. As for this month, he sees potential for further declines as Exxon Mobil launches a new polypropylene plant and Heartland Polymer ramps up production at its new plant. Newell expects propylene monomer prices to fall 5 cents to 8 cents a pound due to lower global spot prices. He risks a further decline in profitability. He noted that polypropylene suppliers are expected to cut production due to a £175m surplus in July-August as demand falls. The number of delivery days has increased to 40 days in September compared to the usual 30-31 days in a balanced market. These sources indicated discounts of 10 to 20 cents per pound compared to spot market prices.
Greenberg described the PP spot market as sluggish as weak demand continued into October and attributed this to a slowdown in the global economy, short-term economic uncertainty, excess resin production and buyers flexing their muscles in negotiations. “If manufacturers continue to lead and win orders through equity changes, rather than just slowing down production to balance supply and demand, we may see further margin declines going forward.”
After falling 22 cents to 25 cents a pound in August, polystyrene prices fell 11 cents a pound in September, with PCW’s Barry and RTi’s Chesshire expect further declines in October and the single single month. The latter noted that PS’s decline in September was less than the 14c/lb decline in raw materials prices, and pointed to continued slowdown in demand and lower raw material costs supporting further declines, barring major production disruptions.
Barry from PCW has a similar idea. Polystyrene prices rose 53 cents a pound since February but fell 36 cents a pound by the start of the fourth quarter, he said. He sees scope for further cuts, noting that suppliers may need to further cut production of styrene monomer and polystyrene resin.
He also noted that while polystyrene resin imports have traditionally been around 5% of available supplies, the more attractively priced polystyrene resin imports from Asia have moved to this part of the world, mainly to Latin America, as freight rates are now much lower. “Whether this will be a problem for North American polystyrene suppliers remains to be seen,” he said.
According to Mark Kallman, RTi vice president of PVC and engineering resins, and Donna Todd, senior editor at PCW, PVC prices fell 5 cents per pound in August and another 5 cents per pound in September, bringing the total decline to 15 cents a pound. in the third quarter. . Kalman could see a similar decline in October and this month. Contributing factors include the continued slowdown in demand since May, abundant supply in the market and large spreads between export and domestic prices.
PCW’s Todd noted that such a dramatic drop in prices in such a short period of time is unprecedented in the PVC market, and many market participants were hopeful that PVC prices would not fall in the first quarter of 2023, as at least one market expert predicted. . . . In early October, she reported that “While PVC pipe processors would like to see lower resin costs, PVC prices falling like a runaway freight train may actually cost them money as resin prices drive down pipe prices. In some cases, pipe prices are reduced. fell faster than resin prices. Recyclers in other markets, such as siding and flooring, are on the other side of the equation because these markets cannot pass the full increase in resin prices onto their customers. They are relieved to see prices fall as quickly as possible, thereby returning their business to some level of profitability.”
PET prices fell 2 cents to 3 cents/lb in September after falling 20 cents/lb in July-August, all due to declining raw material costs. RTi’s Cullman expects prices to fall another 2-3 cents a pound in October, with prices flat or slightly lower during the month. Demand is still quite good, but the domestic market is well supplied and exports continue to flow at attractive prices, he said.
Factors include strong domestic and/or export demand, limited supplier stocks and higher raw material costs due to production disruptions.