Harvey Causing Commodity Resin Price Increases Two Months Later
Two months after Hurricane Harvey came through Texas, the plastics industry is still seeing effects on resin prices. In September, pricing for PE, PS, PET, and PP increased, and sources say that October is likely to see increases as well due to supply strain and transportation shortages, including an anticipated 5-cent increase for PVC. Though production has resumed in their Point Comfort, Texas location, Formosa Plastics Corp. USA is still operating under force majeure, contributing to the expected hike.
Material Cost Update (PVC) – October 2017
Almost two months after Hurricane Harvey, its effects on PVC pricing is still radiating through the industry. Though a five-cent increase was expected in October, but only a 2.5-3¢ increase turned out to be realistic thanks to a decline in PVC exports and an ethylene contract settlement of 3-5¢/lb. Sources at Resin Technology, Inc., Fort Worth, Texas, Houston-based PetroChemWire (PCW), and Michael Greenberg of The Plastics Exchange in Chicago seem to agree that though the recovery from the natural disaster has been faster than expected, challenges still exist in terms of production restarts, logistics, tight supplies, and raised resin prices.
Formosa and OxyVinyl both have multiple units still working up to full rates with Formosa’s force majeure on PVC still being in effect. It is estimated that the force majeure will remain through October.
Material Cost Update (PVC) – August 2017
Earlier this month, Formosa declared force majeure sales limits on specific PVC resins. At first glance, the force majeure seemed to apply only to certain resins, which likely would not cause significant disruption for PVC compounds, processors, or end users – unless, of course, the force majeure period is significantly long or another disruption occurs in the industry.
However, talks are beginning about whether the force majeure could drive up PVC costs in the coming weeks. Typically, PVC prices would be falling due to prices dropping for ethylene, which is a component of PVC compounds. However, the combination of the Formosa force majeure and possible upcoming supply issues from Shintech, who has also experienced mechanical issues, is causing concern around the industry. While Shintech’s customers have not reported delivery issues, some are questioning whether continued supply issues – especially as we head into a busy construction season – could affect PVC costs. For more about these concerns, check out Plastic Technology’s article “Price Hikes Underway for PE; One Could Emerge for PVC“.
Force Majeure on Some PVC Resins – August 2017
Attention All PVC Consumers! According to Plastics News, certain PVC resins made by Formosa Plastics Corp. are limited in availability due to Formosa declaring force majeure sales limits on those materials. Formosa is attributing the supply issues to a mechanical issue that will continue at least the next several weeks. To find out more, check out Plastics News’s article “Formosa Declares Force Majeure on Some PVC Resins“.
Material Cost Update – July 2017
For some time now compound suppliers have been able to maximize pricing for domestic customers by selling into the global market to control supply versus demand in North America. Crude oil prices continue to be depressed, and international pricing for materials like Polypropylene (PP) and Polyethylene (PE) have been under pressure for all markets, including custom plastic extrusion.
This has also put pressure on domestic suppliers, as pricing for their offshore business has been reduced. Even with the global situation, PP and PE compound suppliers were able to maintain pricing, and in some instances were even able to move their pricing by as much as $0.01 per pound. For the most part, however, pricing firmed up and maintained at previous levels for the month of June. In the end, pricing was pretty stable for the month. With the holiday shutdown for Independence Day remembrance, historically this has spelled a slow start to July for material suppliers.
At this point July pricing is a bit of a jump ball. Compound suppliers are looking to at least keep pricing stable for the month of July, and then push for some sort of increase in August. Large scale compound buyers claim to be well stocked for the month, and will be providing downward pressure for August. This could make for an interesting August, and our hope is the net effect of the push-back from plastic extrusion suppliers, injection molders, blow molders, and rotational molders across the country will keep the pricing pressure on compound suppliers for the month of August.
Formtech extrudes custom plastic profiles from a wide variety of thermoplastic materials, including Polyethylene, Polypropylene, ABS, PVC, Acrylic, Polycarbonate, Wood Plastic Composite (WPC) and others. Material pricing is a huge part of our cost for a plastic extrusion, and the purpose of our material cost updates is to provide information to our current and prospective customers for planning purposes.
We serve diverse industries with custom plastic extrusions, from building and construction to merchandising (point of purchase), commercial refrigeration, office furniture and others. Some examples of profiles we manufacture include glass weatherstrip, exterior door jambs, plastic tubing, vinyl seawall, picture frames, replacement bumpers for display coolers, electrical raceway covers, and many, many others. We are experts at custom plastic extrusion, and have been servicing the industry for more than 47 years.
Give us a call at 614-531-9954 or email at email@example.com for more information or a quotation.