Plastics, resins & HDPE report: August 2017
PVC resin prices seem to be stabilizing after dropping in the previous months. Demand appears to be soft with plenty of production. Although there may be some potential for a small decline in pricing, major moves in one direction or another continue to seem unlikely, at least for the time being. Any major disruptions in the price of oil and natural gas could continue to be a factor going forward.
The HDPE piping market has been red-hot all year and pricing finally stabilized over the past two months. This doesn’t mean production has slowed because, in fact, production lines across the country remain full and running at 100% capacity 24 hours a day.
Lead times remain six-eight weeks for most standard sizes and SDRs. Any impact tonnage orders that have hit the lines in the last few weeks are pushing some extruders to 12-16 weeks. It goes without saying HDPE is becoming scarce and this has caused end users to search unorthodox avenues, such as searching for surplus or even used pipe leftover from the water-transfer contractors.
The effect of the current long lead times is almost certainly going to push pricing up again in August, likely anywhere between three to four cents per pound. If there is an increase, and it sticks, consumers should anticipate another price hike in September of at least three to four cents per pound. The current prevailing attitude is no one believes both price increases will hold until the end of this year. In fact, it seems distributors anticipate a price correction in 4Q17.
In the meantime, if the manufacturers know they are going to give back some value, then they’ll want to get the price value while they can.
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