Resin Price Report: PE Prices Hold Steady, PP Drops Another Two Cents

Spot resin trading had a burst of activity the last week of March, more than making up for the slowdown of the preceding couple of weeks, reports the PlasticsExchange in its Market Update.

Pricing was flat to lower the week of March 25, as Prime polyethylene (PE) held steady after a two-week decline in spot levels, and polypropylene (PP) extended its decline, peeling off another $0.02/lb for the third straight week alongside a continued drop in polymer-grade propylene (PGP) monomer costs.

Bargain hunters chase railcars

Some well-discounted railcar offers rolled through, as several producers purged surplus material as the first quarter of the year was ending. The sharp offers facilitated railcar transactions for bargain hunters, while truckload buyers generally had no issue paying a premium for material packed and ready to ship, writes the PlasticsExchange. Export sales to Latin America remained healthy, with good interest coming from Europe, as well, where energy and feedstock costs continued to rise.

March PE contracts were still being negotiated, but the slowdown in demand seen earlier in the month, along with the decline in spot levels, has diminished support for proposed increases of $0.03/lb.

March PP contracts, on the other hand, are following PGP contracts up $0.03/lb, and April PP is already setting up for hefty price relief as PGP costs have recently retreated.

PE prices end March down a net penny

PE trading was strong, as aggressively priced offers emerged while sellers sought to balance their books at quarter-end. Similar to the week before, the discounts were not industrywide and once sold were not repeatable.The highest volume in the final week of March was for linear-low-density (LLD) PE film and injection, followed by a moderate volume of high-density (HD) PE for blow molding. Prime PE prices held steady at the PlasticsExchange this past week, and after starting March up a penny, they ended the month down a net penny.

Producers continued to leverage their feedstock-cost advantage to keep operating rates up while shipping nearly half of their PE overseas. Spot export requests continued to flow into the trading desk at a rapid rate, but buyers required some relief to entice orders, which was enabled on a limited basis.

On the contract front, producers continued to push for an average increase of three cents in the face of waning demand and ample inventory. It is still uncertain if any of the increase will affect March contracts; if not, producers will try again this month.

PGP rally unravels

The PP market was very active as the PGP rally quickly unraveled and sellers scrambled to sell off their PP positions. The benchmark homo- and copolymer PP prices slid another $0.02/lb at the PlasticsExchange trading desk, bringing the three-week loss to a hefty $0.06/lb. Transactions were evenly split between homo- and copolymer PP, said the PlasticsExchange, with Prime outselling off grade and truckload volumes beating railcars again. While it executed on some back-to-back transactions, the PlasticsExchange fulfilled most demand from its market-making inventory, which is now at its lowest level in more than a year.

Price relief imminent for PP contracts

March PP contracts will rise in concert with the three-cent increase in PGP for March, according to the PlasticsExchange, which expects a large decrease to come through this month as costs crater. Producers have been seeking a margin-enhancing increase the past couple of months, but it is hard to tack on another couple of cents when buyers are already enduring cost-push increases, said the resin clearinghouse. Now that major cost relief is imminent, producers might have better luck simply lowering April PP contracts a little less than they will save with the cheaper monomer.

Read the full Market Update on the PlasticsExchange website.