Pricing for most resins appears to have bottomed out in April. A variety of factors are driving commodity resin prices up in North America, including improving demand and rising feedstock costs, as well as idled production for PE. There are still opportunities for plastics manufacturers to lock in historically low resin pricing, but it’s not universal – some resin producers will see their costs go up over the next few months and years as the world economy recovers from the economic impact of the COVID-19 pandemic.
Plastics News reports that rising raw material costs are impacting prices for polyethylene, polypropylene, suspension PVC, solid polystyrene and PET bottle resin (“Demand, feedstocks take the wheel to drive resin price changes in June”, Frank Esposito, Plastics News, published June 26, 2020). They also cite supply impacts of temporary idling by Dow (PE) and Formosa (HDPE) of North American resin production.
The Plastics Exchange cites improving customer demand, including strong export demand, for rising spot pricing in a number of resin categories (“Market Update”, Michael Greenburg, The Plastics Exchange, published June 19, 2020). This is also reflected in the Plastics News article, as they describe strong demand for packaging during the COVID-19 pandemic, as well as general demand impacts from loosening restrictions on social distancing in many states.
Rising oil prices will continue to influence resin prices. Crude oil prices bottomed out in April, with Brent Crude spot prices averaging $18 per barrel before rebounding to $29 per barrel in May (“Short Term Energy Outlook”, U.S. Energy Information Administration, published June 9, 2020). The EIA expects oil prices to slowly increase, with Brent Crude spot prices in the $37 per barrel range for the second half of 2020 and the $48 per barrel range in 2021. This is still considerably lower than recent years, when Brent Crude spot prices averaged $64 per barrel in 2019 and $71 per barrel in 2018.
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