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Resin Price Report: Spot Prime PE Prices Continue to Slide
By PlasticsToday Staff
What goes up must come down, and so it goes in the resin market. After a busy period of spot resin trading activity in October and into November, transactions dropped precipitously the week of Nov. 11, reports the PlasticsExchange in its Market Update. Trading did pick back up toward the end of the week, and railcar sales exceeded truckloads, but completed volumes remained below average. The resin clearinghouse anticipates a busier trading week ahead of the Thanksgiving break.
Resin stockpiled in Houston warehouses
Spot polyethylene (PE) and polypropylene (PP) prices held steady, and while a handful of domestic discounts attracted buyer interest, producers seemed less eager to move material, according to the PlasticsExchange. By contrast, export interest remained robust. Most of the early November export offers were quickly cleared and there is still unfilled demand at price levels seeking competitive supply. There is a tremendous amount of resin sitting in Houston area warehouses awaiting export shipment, but ships to most regions have been full and many cargoes have been rolled to future sailings. Meanwhile, the congestion has caused a slowdown in packaging as bottlenecks arise.
Producers rally to keep domestic market afloat
PE trading was well-distributed throughout all major commodity grades, but the week’s total tally fell short of typical volumes. Pricing for all commodity PE resins held flat, though overall market sentiment remained negative. The PlasticsExchange notes that there have been several other weeks of stability during this down leg of the current cycle, which began in July. Spot prime prices have fallen $0.05 to 0.07/lb during the break and the market is still searching for a bottom. Producers provided a $0.03/lb contract price decrease in October and are trying to keep the domestic market from sliding further before the end of the year.
Preliminary supply/demand data for October released by the American Chemistry Council (ACC) showed that PE producers increased reactor rates, making 166 million more pounds than in?September, though nearly 150 million fewer pounds than in August.?Domestic PE sales were right at their trailing 12-month average, and PE exports were about 99% of their average, while comprising a solid 46% of total sales. ?
Even though total October PE sales were up 2.3% over September, a third straight upstream inventory build reached a new record, which helps to explain why Houston area warehouses are packed to the gills, though much of it is committed for future sales awaiting shipment.
Another force majeure lifted
Spot PP trading dominated completed business at the PlasticsExchange during the week. Homo-polymer PP outstripped copolymer PP sales, though total volumes were still not overly exciting. Demand for packaged truckloads remained steady as a result of slow railcars in transit and packaging delays. The relentless slide in prime homo-polymer and copolymer PP prices paused after dropping about $0.11/lb since peaking at the end of August. Availability improved as Invista lifted its force majeure on PP products, coming just one week after Ineos called off its force majeure on copolymer PP. According to ACC data, PP run rates were down a bit in October, and producers made 5% less PP compared to the trailing 12-month average. After five months of strong sales, domestic demand was below average for the second straight month.
There was an uptick in exports, which reached 5% of total PP sales, and that helped generate a small drawdown in upstream inventories, which are still considered healthy. For a more detailed look at production and sales data, readers are encouraged to subscribe to the ACC.
Third straight price drop for PP contracts
Despite the stable PP market and the decline in October stockpiles and run rates, November PP contracts will take a third straight price decrease correlated to falling polymer-grade propylene (PGP) monomer costs. The PlasticsExchange currently anticipates a drop of around $0.03 to 0.04/lb, adding to the 10-cent decline seen in the previous two months. The forward PGP market is priced above current levels, so it expects to see a higher trending market come January.
Read the full Market Update on the PlasticsExchange website.
Global Plastics Treaty Talks Begin Final Session Clouded by Uncertainty
The final negotiation session toward a global plastics treaty kicks off Monday, Nov. 25, amid a presidential transition and uncertainty over the US position on curtailing or banning production of certain plastics.?
The United States generally had sided with large plastics producers in seeking a treaty that regulates a more circular approach to controlling plastic waste. That changed —?and changed again —?when the Biden administration in August signaled a willingness to join calls to curb plastic production but appeared to reverse course earlier this month.
INC-5, the fifth session of the Intergovernmental Negotiating Committee, runs Nov. 25 through Dec. 1 in Busan, South Korea. The U.N. Environment Programme aims to develop and sign an international legally binding instrument on plastic pollution, including in the marine environment, soon thereafter.
Tension between plastics-producing nations and countries most affected by plastic waste
A significant gulf between plastics-producing nations and those most affected by plastic waste developed over the course of negotiations, which began in November 2022.?“High Ambition Coalition” states aim for language that will restrict or ban certain “problematic” plastics and chemicals from production. Large plastics producers, including China, Russia, India, and Saudi Arabia, have balked at such measures, instead focusing on targeted control of post-use plastics.?
Underpinning that key divide remains the need to agree on a host of issues ranging from the technical and financial aspects of meeting plastics treaty mandates to whether the final instrument should include a variety of human rights perspectives.
Trump seen as industry friend
Just prior to the re-election of Donald Trump as president, the nonprofit group Beyond Plastics issued a 27-point wishlist of plastics priorities for the next administration. Speculation has arisen that the US plastics industry stands to gain from Trump’s win.
Organizations of various stripes have issued their appeals for what they view as the ideal outcome of the U.N. talks.
The World Wildlife Fund cautioned in a Nov. 18 statement that “an ambitious global plastic pollution treaty is the win 2024 needs in a year of dismal environmental progress. … Current plastic pollution treaty texts don’t go far enough toward ending pollution but there is still time for governments to agree on a strong treaty by focusing on the most urgent and impactful core measures.”
GPPC lobbies for circular economy approach
Meanwhile, the Global Partners for Plastics Circularity (GPPC) stated that it “reaffirms its strong commitment to securing an effective agreement that helps end plastic pollution by the close of INC-5.” GPPC, a multinational collaboration of associations and companies that make, use and recycle plastics, urged governments “to stay the course and finalize an ambitious, implementable, and inclusive agreement that prevents plastic pollution and accelerates a circular economy for plastics, where plastics are designed for reuse and recycling, and remade into new products at the end of life.”
Watch INC-5 sessions via livestream on UN Web TV.
Is ExxonMobil Hedging Against a Lawsuit?
Two recent news items involving ExxonMobil, at first glance, appear to be unrelated. But are they really?
First, ExxonMobil announced this week that it is making a large investment to expand its “advanced recycling” equipment in Baytown, TX. Advanced recycling is also known as pyrolysis, a process that heats plastics in an oxygen-free environment to such a high temperature that they degrade and become low-viscosity hydrocarbons (naphtha and similar mixes). The naphtha is then treated like any other naphtha fraction within the Bayport facility and further processed to create the monomers needed to make new plastics.
This process differs from the normal thermal degradation that occurs when an extruder or mold gets too hot because of the oxygen-free environment. When oxygen is present, the plastic will char (or, in extreme cases, burn). Without oxygen, the long polymer chains just fall apart.
ExxonMobil’s particular technology is called Exxtend, which is an exxcellent exxample of exxemplary creativity by the marketing folks, huh?
ExxonMobil to increase chemical recycling capacity by 600%
Its current plant can process 80 million pounds of plastic a year. The new investment of $200 million will increase that capacity more than 600% to 500 million pounds. Even for a giant like ExxonMobil, $200 million is a significant investment. In my career, the largest capital investment I was ever involved with was for $10 million and getting that took far more time, effort, and sweat than I thought was necessary. I can only imagine all the internal approvals needed to sign off on spending this amount.
As an aside, I’ve never been on board with advanced recycling. Pyrolysis is a chemical reaction that runs in the opposite direction of polymerization. Polymers become monomers which become polymers which become . . . around and around you go. The only problem is that there are inefficiencies in both reactions that cannot be recovered. The second law of thermodynamics has its hands all over these operations and requires that energy is put into the loop to make up for the waste energy in each operation. There will also be material waste in each step, as exceedingly few chemical reactions are 100% complete. Pyrolysis is a crude, blunt technique for slicing up polymers, and the inefficiencies will be that much worse.
Golden State alleges deception on plastics recyclability
The second news story is from late September when the California attorney general filed a lawsuit against ExxonMobil (and anyone else acting as its agent) for “deceiving the public on recyclability of plastic products.” The initial complaint goes on for 147 pages and covers a wide range of allegations. You can find it online if you are interested.
The lawsuit doesn’t have the almost mandatory request for XX BILLION DOLLARS in damages, but certainly, that amount will be provided in the future, and it will be large. California is a large state with a large population, so if any damages are found by the jury, you can expect them to be large, as well.
The cynical side of me sees the $200 million investment in advanced recycling as a hedge against this lawsuit. ExxonMobil now can argue that advanced recycling is growing at a tremendous rate and that it is actively involved in the effort. Even if it doesn’t completely sway the jury to find ExxonMobil innocent if the investment can get the damages reduced by even just $1 billion, that would be a 5x payoff.
Not too shabby.
Red States Disproportionately Reap Benefits of Democrat-led Green Legislation
The recent $1.35 billion investment?in battery separator film manufacturing in Virginia highlights a notable trend in the positive effects of the Democrat-driven, awkwardly-named Inflation Reduction Act (IRA). Red states represented by senators who unanimously opposed the legislation have disproportionately reaped its benefits in terms of investment attracted and employment created.
For example, approximately two-thirds of the green-energy projects initiated since the IRA's enactment are located in Republican-held congressional districts. This has led some GOP lawmakers to publicly support these initiatives at the local level, while still advocating for repeal of the IRA itself.
Isn’t it ironic?
Take outgoing Virginia 5th District Republican Congressman Bob Good, who voted against the IRA but nevertheless was present at the groundbreaking ceremony for the mega Microporous project in his state. “Their choice to locate a battery separator manufacturing facility here reflects the strength of our regional commitment to economic growth, and the employees, their families, and the surrounding communities will all benefit,” he noted without a hint of irony.
As a member of the Freedom Caucus, Good, whose term will officially end in January 2025, had been vocal about his opposition to the IRA, according to Politico and other sources, labeling it a significant expansion of government spending that he believed would be “detrimental to economic growth.” He had called for the complete repeal of the IRA, aligning himself with other conservative members of Congress who share similar views on climate spending and government intervention in the economy.
Red states going green with IRA benefits
While President-elect Donald Trump campaigned on a fossil fuel-friendly “Drill baby drill!” policy and has publicly voiced his disdain for green technologies ranging from electric vehicles (EVs) to wind turbines, multiple reports highlight that regions ruled by his party are benefiting the most from IRA-driven investment.
Will GOP bite the hand that feeds?
When Republicans gain full control of the House and Senate in January this coming January, the hope is that very little of the IRA in its current form will be immediately repealed, irrationally rebuffed, or subjected to illogical reactions. Any impending review should be science-based, recognizing that anthropogenic climate change is real, and conducted in a bipartisan manner. If this can be achieved, plastics will continue to play a key role in the green transition.
Recommended Reads ??
?? EVs Are Driving UHMWPE Market Growth: The ultrahigh-molecular-weight polyethylene (UHMWPE) market is projected to experience an 8.8% compound annual growth rate.
?? Syensqo Expands Polysulfone Production in Ohio: The Solvay spinoff is increasing output by 25% to satisfy US demand from the healthcare, water purification, and hydrogen production sectors.
?? What Trump's Dr. Oz Nomination Means for Medtech: Scott Whitaker, president and CEO at AdvaMed, reacted positively to the news that the heart surgeon and former television talk show host will be nominated to run CMS.
?? LCA Backs TerraCycle’s Green Cred: The company’s unconventional recycling models rate better than old-school waste handling per life cycle assessment metrics.
?? Unlocking Profitability in Plastic Waste Management: A Review of Economic Models: By aligning environmental responsibility with economic incentives, we can drive meaningful progress without the burden of excessive regulation.
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Just a retired Guy who wants to run for Governor of North Carolina in 2028.
3 个月Very informative. How about mix with asphalt and pave roads with leftover plastic.