Regional prices for all grades of PE were up an average of 5 cents per pound for the month. Makers of high density PE were attempting to add another 2 cents to that total, but that increase had not gone through to most buyers as of June 24. Most regional PE prices had increased 5 cents in May and now are up 38 cents so far in 2021 and 58 cents since January 2020. HDPE prices are up 2 cents less than low and linear low density PE. The June price hike is the seventh consecutive for the PE market.
The North American PP market continued to surprise in June, with prices increasing an average of 12 cents per pound. That surge followed a 13-cent hike that hit the market in May. Prior to that, regional PP prices had dropped 19.5 cents total in March-April. Factoring in previous increases, regional PP prices are up a net of 66.5 cents since December.
The June hike consisted of matching 4 cents of increases in price for polymer-grade propylene (PGP) feedstock and 8 cents of profit margin improvement that was successfully implemented by PP makers. Heading into the last week of June, the PGP hike was expected to be higher and there was doubt if PP makers would see all of the 8 in margin improvement they were seeking. They hadn’t been successful in getting any of the 5 cents in margin they tried to pass in May.
The ultimate makeup of June’s 12-cent hike came as a surprise to some market watchers, including Scott Newell, a market analyst with RTI.
Newell said that North American PP demand is strong across many markets, even though industry data shows a decline from last year. “The data shows sales, which are down because processors can’t get material,” Newell said.
Many PP makers in the region remain on force majeure sales allocations, as the supply chain continues to recover from the ice storm that hit Texas in February. Some producers now are seeking PP price hikes of 3 or 5 cents effective July 1 or 5 cents effective Aug. 1. Producers are not aligned on these moves, which would be in addition to any price changes from PGP. PP makers have gained more than 30 cents in margin improvement in the last year.