Resin Price Report: Pending Increase Sends Buyers Rushing to Spot Market for Deals

Strong demand continued to support a very active resin trading pace the week of March 4, reports the PlasticsExchange in its Market Update.

The flow of off-grade polyethylene (PE) and polypropylene (PP) railcars was relatively light, but resellers offered some of their forecasted prime cars into the PlasticsExchange’s marketplace. Asking prices lifted higher, but transactional levels were mostly steady, and Prime PE and PP grades stayed flat across the board at the resin clearinghouse.

Facing yet another monthly PP cost-push price increase, buyers rushed to the spot market to scoop up well-priced resin. PE dealings came on strong toward the end of the week, said the PlasticsExchange, when several railcars and truckloads changed hands. Interest remained strong on exports, but some push back on prices developed as they tick higher in Houston.

PE producers eye price increases of at least $0.03/lb

PE producers are seeking to implement at least $0.03/lb of increases that did not take hold in February. Meanwhile, PP producers are looking to expand their production margins by raising March contracts $0.02 to 0.03/lb beyond the pending increase in polymer-grade propylene (PGP) monomer costs, according to the PlasticsExchange.

PE trading activity had another strong showing, with a good mix of railcar and truckload transactions. In a rare instance, more off-grade resin changed hands than Prime at the PlasticsExchange. Linear-low-density (LLD) PE film was the biggest mover for the second week in a row, again followed by high-density (HD) PE for blow molding and injection. Low-density (LD) PE mostly was an afterthought.

Off-grade PE prices stay firm

Suppliers raised railcar asking prices by around $0.03/lb over late-February levels, as producers positioned for a second attempt at their mostly $0.03/lb increase which did not confirm last month. While off-grade prices stayed firm as producers exported much of their surplus material, the PlasticsExchange said that it held its prime PE prices flat after they steadily advanced $0.05 to 0.07/lb since the beginning of the year. Buoyed export levels have lifted the general floor price of PE the past few months. While it is often fairly wide, the PlasticsExchange said it is finding only a very small delta between packaged Houston resin and the normally more expensive domestic bulk railcars. Reseller inventories for most commodity grades have thinned out, as they have been selling off their warehoused materials into the rally and cautious with their re-stocking. While most of the main commodities are still accessible in moderate volumes, certain resins are particularly tight, including LLDPE for both injection and rotomolding as well as LDPE for injection.

Another force majeure

PP trading had a solid week. Homo-polymer slightly outsold copolymer PP. Similar to PE, off-grade sales exceeded prime as buyers hunted for better opportunities than contract levels, which are poised to rise again in March. Invista declared a force majeure on its PP resins, bringing the total active force majeure delcarations — including Braskem and Ineos — to three.

Despite spot PGP monomer prices easing $0.015/lb this past week, PP prices at the PlasticsExchange ended the week flat amid tightening supplies. Much of the older and cheaper warehoused reseller resin has long been picked over, making attractively priced material very hard to find. If producers maintain their discipline of dramatically reduced reactor rates, they will have a good shot at advancing the small margin-enhancing increase they are seeking, according to the PlasticsExchange. However, with PGP prices jumping again in early March and another imminent cost-push increase already at hand, additional hikes could really hamper contract demand this month.

Read the full Market Update on the PlasticsExchange website.