Polymer prices rise

Polymer prices have gone up once again. News indicates that Polypropylene prices were up by almost U$10, LLDPE was up by US$15. HDPE prices increased in the range of US$30-60, depending on the grade. A summary of price movements in USA Polypropylene As the market has had a relatively small but definite recovery towards the end of June, can it be declared that a bull market is again in progress for Polypropylene? The Spot Polypropylene (PP) market is noted to have been active in June; first breaking, then recovering and finally moving forward. Influenced by the falling feedstock prices, producers and players all along the resin supply chain had been settling high-cost stockpile, leading to the lowering of Polyethylene prices in the first half of 2005. As crude oil approached US$60/barrel, producers have also reacted with a price hike, in anticipation of a rise in propylene monomer prices. If demand falls as a response higher resin prices, producers will likely slow down production as it will not be economically viable to produce more than for current orders. If this becomes the case, tight supply can be expected. Polyethylene PE prices that weakened during the first two weeks of June and bottomed out at mid-month, have since begun to recover. As the market gains momentum, recovering prices have wiped out losses recorded in the early part of the month and are now poised to move higher. It seems that the producers could soon regain pricing power after a long period of price erosion and adjustments as inventories near depletion levels. When Nova Chemical's announced a Force Majeure for their Ethylene and Polyethylene products, it triggered a rush to buy Polyethylene. The anticipated summer Asian buying spree, coupled with new and swift buying from the Middle East, indicates a bullish imbalance between supply and demand. Rising demand on one hand and dwindling supplies on the other will lead to a price hike. On the supply side, production capacity has been idled in Europe, while reactor rates having already been restrained in the USA. Polystyrene Polystyrene prices were the last to recover from their Q2 slide. However, around the middle of June, amid weak demand, PS prices began to recover as producers pulled back their offers seeking higher prices. With crude oil spikes, benzene prices have been pushed back up and Polystyrene producers are seeking higher prices to cover the rising feedstock costs. As producers prepare to implement their price increase, will demand develop to buy PS at a higher price in July?