North American prices for PET bottle resin, polycarbonate and PVC increased in March, as strong demand once again was met by tight supplies.
Regional PET prices surged an average of 7 cents per pound in March after rising a total of 20 cents in January and February. As in previous months, the March hike was caused by supply tightness and higher feedstock costs, as well as by freight and logistics challenges. PET prices were up 26 cents in 2021.
"It's all of the above," one PET market watcher said about reasons for the March increase.
PET demand typically increases in spring months, as beverage companies prepare for stronger demand brought on by warmer weather. Bottled water accounted for almost 25 percent of the U.S. beverage market last year, according to consulting firm Beverage Market Corp. Carbonated soft drinks came in second with a share of almost 19 percent.
In polycarbonate, prices moved up an average of 10 cents after climbing 9 cents in February and a total of 25 cents in the second half of 2021.
"Things are still tight," one market watcher said. "Additives are driving a lot of these increases. It's still hard to get glass fiber and flame retardants and even pigments.
"Then you add in the Ukraine crisis and now COVID in Asia again and you see how producers are still shipping hot pellets straight from production. They're not even getting to the warehouse. And there's really no reason to expect lower prices in the second quarter," the market watcher said.
Sabic's PC resin plant in Burkville, Ala., is down until mid-May for a maintenance turnaround, sources said, further affecting supplies in North America. That plant represents about 10 percent of PC capacity in the region, according to industry data. North American PC demand from appliance, automotive and electrical markets remains strong, sources added.
PVC prices ticked upon an average of 1 cent per pound in March after tough negotiations between buyers and sellers. Some accounts saw a slightly higher increase, while others were flat. The 1-cent increase reflects the market average.
Regional PVC prices were flat in February after dipping 3 cents in January. Prices for the material increased 31.5 cents in 2021.
Market veteran Esteban Sagel told Plastics News that PVC buyers believe availability is no longer an issue and inventories have recovered.
"With export warehouses packed and logistics making exports hard, buyers expect additional product may become available for domestic markets," said Sagel, principal of Chemical & Polymer Market Consultants in Houston. "For products like PVC or polyethylene, I'm not sure how long producers can hold onto the current high prices or justify even higher prices."
Construction activity is a main driver of PVC consumption. U.S. housing start activity in January came in at a 1.64 million annual rate, up almost 1 percent vs. the same month in 2021. This trend would indicate slightly higher PVC consumption.
The ongoing Ukraine crisis, which began when Russia invaded that nation on Feb. 24, has caused tremendous volatility in global oil and gas markets, which have an impact on resin prices as well.
West Texas Intermediate oil prices were near $92 per barrel when the invasion began, then surged to $124 by March 8 before declining to just over $96 at closing April 6, for a net increase of about 4 percent since Feb. 24.
Markets for natural gas — used as a feedstock to make polyethylene and PVC — had seen similar volatility, beginning at $4.62 per million British thermal units, then bouncing around before surging to close at $6.03 on April 6, a net increase of just over 30 percent since Feb. 24.
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