Market Update — August 2024

Resin Prices Stabilize, Container Freight up Sharply

August is Star’s birthday! Started in 1988 as a tolling business for what is now known as Sabic so congratulations to Doug Ritchie and all of the associates at Star who work to make our customers satisfied with our products every day. And thank you to our customers who make it all possible!

Market
Prices are beginning to stabilize after increases in the first half of the year dominated across seemingly all products which were cash cost motivated and not supply/demand price adjustments. Hurricane Beryl made landfall in Texas on July 7th. Local flooding and power outages were reported. We’re 3 weeks past and you’ll see below the effects of the storm in the south and the Midwest. This affected not just the Texas region, but up through Illinois with straight line winds and tornado activity which took out electric service to many major metropolitan and manufacturing areas which lost power for over 10 days. Details follow later in this note on who was affected and how.

Recycling
Reported in Recycling Today, https://www.recyclingtoday.com/news/plastic-chemical-recyclingpyrolysis-
propublica-report-skeptical/ a study by ProPublica.org claims that of all the plastic that gets to a Municipal Recycling Facility (MRF) only 15 to 20% is used in chemical recycling. Mechanical recycling accounts for a 55- 85% use. In chemical recycling, the naphtha that is created in the process is contaminated and they must blend it down with virgin naphtha which dilutes the overall recycled content of the finished compound. Mechanical recycling has been our bread and butter since our inception in 1988. Our reNova® line, which is 3rd party validated by UL, will be featured in the August issue in Plastics Technology, we’ll forward you the link as it becomes available. Materials

Nylon
BASF’s Freeport plant which produces nylon 6 is on force majeure as of July 11. When announced, they could not project how long the FM would be in place. Overall, automotive continues to drive the nylon market which is soft right now in North America. Costs for nylon have been elevated much of the year while 6 has been flat but expectations are now bumping up this and next month.

ABS
Certain materials such as ABS GP in natural and black are being driven from Asia in terms of global supply. The capacity well exceeds the demand locally in Asia and this is one reason there are blank ships moving to Asia as they don’t need NA ABS. On July 2nd, Sabic announced an increase on FR ABS ($0.30/KG) and FR PBT ($0.28/KG) for implementation on August 1st. This is related to the FR additive costing which they are seeing move up. The Mexican drought caused havoc in ABS given nearly 40% of North American ABS is supplied from Mexico. Though they were firing back up just a week ago, it takes time to normalize production and make good product. Imports were grabbing share as there was a short-term increase of imports by nearly 10% as this situation developed.

Polycarbonate
Prices are up just 1 to 2 CPP since our last edition and again, these are cash cost increases. There are signs that the pricing levels will hold or be down by a penny or two between now and the end of the year. From last month, we had ADNOC making its play for Covestro in “concrete negotiations” for acquisition by Abu Dhabi National Oil Co. (ADNOC), Covestro said it wants to save 400 million euros ($427 million) in material and personnel costs globally by 2028 reported

Plastics Newson
6.27.24. Most of the cuts would involve Corporate HQ in Germany. Again, if this deal happens, between Sabic and ADNOC, 38% of the world PC supply will be based out of Saudi Arabia.

PE
Formosa pushed out an additional 5 CPP increase on July 11 for August 1. This was in addition to the 5 CPP for July 1st. PE supply is available, and this is a cash cost increase.

Acrylic
Trinseo announced Plexigalss® and Aristech acrylic sheet products with an increase of 5% across the board for August 1st which was announced on June 27th.

PP
ExxonMobil came out with a 3 CPP increase for Propylene on July 9th that they were back dating to July 1 shipments based on the increase in propylene monomer.

HIPS
American Styrenics out of the plant in Joliet, IL, which produces HIPS, had electrical disruption from straight line winds and that is pushing them to sales allocations. While they don’t say ‘Force Majeure’ in their letter, it has similar supply effects. This is a result of the end of Beryl which put straight line winds near hurricane levels in Illinois and surrounding states.

Freight:
Import container freight rates are getting ugly again – up to $7,000 for a west coast delivery from Asia on a 20-foot container. The number of blank ships (not with freight moving from NA to Asia) is continuing to grow so they have no revenue on half the trip. We are also seeing that containers will increase in price through Q4/24. Expectations are the numbers will be nearing the $20,000 level which hasn’t been seen since COVID.

The Panama Canal is an issue again – low water levels have again reduced the amount of traffic it can process daily. And at the same time, the Red Sea issues are again happening, making it a dangerous route to travel, so longer routes are being used causing delays.

The Panama Canal and Red Sea issues creates short term challenges to shipping globally. Interlog reports it will take 6+ weeks to effectively create the new lanes and get supply normalize but at the new extended lead times and costs.

Call us with your problems in your engineering resin needs – PC, Nylon 6 and 66, ABS specifically flame-retardant materials in custom color. All with UL recognition.

And don’t forget our 3rd party validated reNova® product offer; a sustainable offer which cuts across our entire product line!

Best Regards!
The Star Team