NPE ’18: US plasticizer prices competitive amid healthy supply

HOUSTON (ICIS)–The US plasticizers market has softened from increases early in the year that tracked rising prices upstream, most notably in propylene. Supply levels are healthy, and pricing is competitive, heading into this year’s National Plastics Exposition (NPE).

Upstream costs are either declining or levelling out this spring from those early-year spikes. Propylene fell by 6 cents/lb ($132/tonne) in March and by another 1 cent/lb in April. Feedstock 2-ethylhexanol (2-EH) rolled over in April on weaker propylene. Supply snugness from early-year 2-EH outages and strong seasonal demand limited downward movement in 2-EH pricing. The tightness has not affected plasticizers, however.

Domestically produced plasticizer supply levels are healthy. The BASF plant that was converted to produce dioctyl terephthalate (DOTP) last year is running at stronger rates, alleviating some post-Hurricane Harvey supply concerns that lingered into early 2018.

Competitive pricing for US material has emerged as a result, particularly for DOTP and di-isononyl phthalate (DINP). Buyers appear to have an appetite for domestic product over imports, which have been lower to start the year.

“Demand is fairly good, but I am not getting much of it,” a trader source said. “Customers are looking for ridiculous prices, and I cannot provide it.” However, he added that US demand should pick up for imported material in the summer.

Rising prices in other regions pressured import prices upward amid tight supply, creating a disconnect with the US.

Plasticizer demand will pick up seasonally in early summer, although market players noted strong demand thus far in the year.

The construction sector, in particular, was a boon to demand heading into 2018 as rebuilding efforts from late-2017 natural disasters in Texas, Florida and California carried over.

An early-summer seasonal uptick is expected, especially as warm weather spurs additional construction activity, before a late-summer lull.

While business has been good, market players said, the rising costs of material transport adds price pressure going forward.

A Department of Transportation (DOT) mandate that limits driver hours on the road in the interest of safety has caused bottlenecks and significant delays in shipments, anywhere from two to four weeks, as well as a driver shortage.

“Trucking is absolutely disgusting in the US right now,” the trader said.

Chemical buyers are being asked to help absorb increased costs.

“The trucking issue is a huge problem, with too many retiring drivers and the electronic log system,” one buyer said, adding that the difficulty in moving product from producer to customer is increasingly being used as the reason for raising prices.

Eastman issued an increase announcement in late April for DOTP and DOP in May.

Major plasticizer producers in the US include Eastman, BASF and ExxonMobil.

Sponsored by the Plastics Industry Association (PLASTICS), NPE2018: The Plastics Show takes place on 7-11 May in Orlando, Florida.

Focus article by Amanda Hay