UPR Margins Under Pressure Due to Increasing Feedstock Costs

Unsaturated polyester resin (UPR) prices have been on an upward trajectory since the fourth quarter of 2020.  Consecutive price increase announcements have been made by producers in both Europe and the US, on the back of escalating feedstock costs and raw material shortages.  For the time being these price increases have not dampened demand, which is very healthy, and the final quarter of 2020 finished well above expectations for most.  However, some market participants fear that as prices continue to increase, downstream buyers could look at alternatives. 

UPR prices were stable to softer during the second and third quarter of 2020 but at the start of the fourth quarter this changed, and prices started to increase quickly, especially in Europe.  The last quarter of the year was a perfect storm for markets, demand returned much quicker than anticipated at a time when inventories through the chain were low and production issues for feedstocks were ongoing.

In the US most major feedstock costs have been trending upward since October.  The isophthalic acid contract reference price has increased by over 10%.  Maleic anhydride prices have climbed by almost 9%.  Phthalic anhydride prices have seen a more moderate increase, going from $47-48 c/lb (contract molten) and $49-50 c/lb (contract flake) to $49.50-50.50c/lb and $51.50-52.50 c/lb, respectively.  DEG supply has been tight, and prices have increased by almost 19% and monopropylene glycol costs have jumped by over 20%.  During the same period, styrene contract prices have also spiked, and spot values have increased from $28.1-28.34 to $44.2-44.7 c/lb, an increase of almost 60%.