Market Update — February/March 2024
Orders and Prices are on the Rise
There is just too much happening to wait any longer to publish this extra edition of the MMU, so here we go!
Overall Market –
Talking with customers which includes OEMs, molders, and distributors – many are seeing an uptick in orders
from markets that had been flat for much of 2023. Inventories seem to be down, and materials are needed
sooner rather than later. This is great short-term news and hope it’s the start of something bigger for 2024! The
JP Morgan Global Manufacturing PMI data is a composite index that measures 5 different components of the
manufacturing sector, including the growth and direction of manufacturing. It had been contracting for 7
consecutive months and came back from a 49 to a 50 rating in January. While it seems like a small change, it is
good news as this is one of the signs of stabilization in the manufacturing sector and therefore good news for the
economy. The Chinese New Year started on February 10th and went through February 24th. Production came to
a halt and work at Chinese ports was limited though it is yet to be seen if this impacted supply with the already
longer lead times due to the canal issues. Before the shutdown, it was reported that the volume of import
containers being loaded for shipment was well above 2023 levels which should be considered good news to
demand globally.
Pricing
The increase announcements in February have been broad-based in the market while not giving 30-day notice
on many of the announcements:
In polycarbonate, Covestro made their PC announcement of 10 CPP with 30-day notice for March 1
implementation. This is well after the Christmas present that Sabic dropped of 9 CPP on the 18th of December
for January 15th implementation.
Styrenics are very active right now. Ineos announced an increase across the board on their 5 trade names of
ABS – Lustran®, Novodur®, Terluran®, Lustran Elite®, and Novodur High Heat® lines. This was for 8 CPP
announced on 2.19 for a 3.1 implementation date. Less than 2 weeks’ notice. They were citing manufacturing
and delivery costs for the Americas region as the justification for the increase. Stryopek, makers of all thing’s
styrene increased prices by 5 CPP with the announcement coming on the 12th of February with an
implementation date of 3.1.24. Styrene monomer supply issues in North America are becoming more apparent
and seem to support the increase announcements.
About 50% of North American styrene monomer production is challenged reports CMA. Other data points
we’ve learned include Shell’s Canada facility had powered down from the cold weather and is believed to be
down through mid-year. Cos-Mar/Total Petro Chemicals experienced a power failure and is likely to remain
down through sometime in May, and Ineos Styrolution is limited in styrene monomer production and that’s the
reason given for the increase. Yes, these feedstock production challenges may change as time moves forward, is
this a mini version of the 2021 winter storm in the Gulf Coast that caused havoc throughout the industry?
In nylons, BASF announced a March 1st increase for PA 6 (both Caprolactam and Copolyamide) and 66
(Copolyamide) by 20 CPP. This was announced on the 12th of February. Following suit, AdvanSix came out
with a 25 CPP while Ascend came out with a 14 CPP increase on February 20th and an implementation date of
March 1.
LYB had announced the PP increase of 4 CPP for February 1 and mid-February, it was pushed to March 1st
implementation and at just 3 CPP. This was for all of North America but no reason why the push-out and
reduction of the increase.
Intermodal transit
We were at pre-pandemic intermodal monetary rates at the end of Q3/23 and into Q4. Now the rates have nearly
doubled since late December and have remained high since with the Suez and Panama Canal issues reported last
month. This month, there is a certain expectation that prices will start to come down again in the near term. It
seems that the Panama Canal drought is beginning to resolve itself and certain carriers are resuming services
through the Red Sea, with the help of the US Navy. To put it in perspective, the effect on revenue during
January 2024 was ~$425M but in January 2023 it was over $800M, nearly half. There’s a reason to believe we
may benefit from the easing of the concerns at the canals, which has led to higher volumes.
Sustainability
Did you know that Star Plastics earned a ‘good’ rating on our first EcoVadis submission? From the EcoVadis
website: EcoVadis helps you manage ESG risk and compliance, meet corporate sustainability goals, and drive
impact at scale by guiding the sustainability performance improvement of your company and your value chain.
They are a globally recognized assessment platform that rates businesses’ sustainability based on four key
categories: environmental impact, labor, and human rights standards, ethics, and procurement practices. We will
still be working on improvements in our score which exemplifies our commitment to the environment. We have
significant goals for sustainability and the work with EcoVadis continues to show Star’s commitment.
Finally,
Star is participating in the annual Plastics Recycling Conference (PRC) on March 25-27. Top plastics
executives from plastics processors, global OEMs, resin manufacturers, trade groups, and government agencies
will attend. Visit our booth 434 in Grapevine, Texas. In three days, they’ll have over 40 speakers and they
expect over 2500 people and a great networking session. This is where to learn about recycling, sustainability
and to network with others in the industry.
A few of the sources for this report include CMA, FreightWaves, Plastics News, JP Morgan, Interlog, and of
course word of mouth.