Plastics Recycling Update Magazine: A closer look at polyolefin markets in 2012

## A closer look at polyolefin markets in 2012


_By Editorial Staff, Resource Recycling_

Polyethylene and polypropylene markets were somewhat volatile in the last six months of the year.

The bottom of the **polyehthylene** price curve was found in July, after seeing a price decline of nearly 15 cents per pound over the previous two months. As a result, buyers re-entered the market and gobbled up available inventories. At the same time, a few virgin resin producers cut output to await a price rebound. With resin in short supply, several plastics makers then nominated a 5-cent per pound price increase for August, which stuck. When about one-fifth of the U.S. ethylene production capacity was idled for several weeks due to Hurricane Isaac, plastic buyers again became nervous. At the same time, resin makers said they wanted 5 cents more per pound in the ninth month. However, market conditions ultimately forced them to offer flat pricing in September, which led in increased sales. As a result, resin inventories tightened in September, thus providing an opportunity for resin makers to seek an increase of 5 cents per pound for the 10th month of the year. However, because many converters bought large amounts of PE in September, October sales slowed and producers were unable to attain the price increase. Resin makers tried again in November, also without success, due in part to a weak export market and rising inventories. With large volumes of resin available at attractive prices at the end of the year, many analysts recommended that converters fill up there warehouses and silos. If orders increase and cut into inventories, prices may inch upward in the first quarter.

The huge amount of **polypropylene** sold when the market hit bottom in June led to flat pricing in July. With monomer prices then slumping, resin buyers were able to push prices slightly lower in August, by about 2 cents per pound. When inventories subsequently tightened, plastics makers asked for 4 cents per pound more in September, in line with the increase in the cost of propylene. The market then rose by a penny or so in October in conjunction with a propylene price increase and moved up 4 cents per pound in the 11th month. The value of PP then flattened out as the year ended. But as with PE, industry experts predict that the value of polymer-grade propylene will rise in the first quarter, thus pushing PP prices upward. This has resulted in end-of-the-year sales activities as converters try to beat the expected January resin price increase.

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