Resin Price Report: PP Resin Contracts Could See Double-Digit Discount

The second quarter of the year got off to a roaring start at the PlasticsExchange, as buyers took full advantage of discounted spot resin prices. Polypropylene (PP), in particular, was the most popular pellet on the block, said the resin clearinghouse in its Market Update.

Completed volumes in the first week of April were well above average, and have been elevated for most of the past four months, the PlasticsExchange writes in its weekly report. Spot sales have been moving back toward historical trends in volume after a relatively slow 2023, which saw widespread processor de-stocking.

Prime PE resin loses $0.01/lb.

Prime polyethylene (PE) resin grades dropped another $0.01/lb, while spot PP lost two to three cents as the monomer rally continued to unravel. It took a few days into the week of April 1 before railcars started to materialize. It seems that PE producers needed to see if any of their March $0.03/lb increase would implement before sending out spot domestic railcars. By mid-March the PlasticsExchange came to believe that the increase would not stick, and, indeed, it did not. Producers continue to favor the export market for incremental sales, and international resin requests have been pouring into the exchange, mostly from Mexico, the rest of Latin America, and Europe.

PP contracts rose $0.03/lb in March, commensurate with the same increase in polymer-grade propylene (PGP) contracts. The market is already setting up for a very sizable decrease for April, however, which could reach double digits, according to the PlasticsExchange.

PE started strong in April, as some softer domestic prices were met by eager processors ready to buy. The majority of business was evenly spread between high-density and linear-low-density PE, followed closely by low-density PE. The flow of spot offers was sporadic, with some producers aggressively discounting prices to move material, while others had little or no excess resin to sell.

PE sellers try again to roll out price increase.

Prime PE prices at the PlasticsExchange came off another penny last week and now sit $0.03/lb off the highs, which brings 2024 gains back down to an average of $0.03/lb. Sighs of relief downstream greeted news that March PE prices rolled flat for the second straight month. Producers will give their increase another shot this month.

The flurry of initial export offers have mostly sold out and exporters are searching for incremental material. International resin prices have generally been elevated by logistics issues and higher shipping costs because of disruptions in the Red Sea and Panama Canal. Prices have been further buoyed by rising energy/monomer, driving buyers to the well-located United States, which also enjoys a substantial feedstock cost advantage.

Rising demand for PP.

Sliding prices boosted PP demand the week of April 1. Homo-polymer PP was the main mover and largely outsold copolymer (Co) PP, but then again, CoPP supplies have been quite tight even as prices have fallen sharply, said the PlasticsExchange. Prime PP prices quickly shaved off another two cents at the beginning of the week, as spot monomer costs continued to drop. Prices have now come off $0.02/lb in each of the past four weeks, leaving current levels just $0.03/lb higher for 2024. Although sellers have been taking railcar orders based on their replacement costs — which will fall dramatically in April — resin that is packaged and ready to go has been relatively scarce and buyers have been willing to pay up for quick shipments.

Spot PP prices, both prime and off grade, did not rise nearly as much as monomer did during the rally, and the PlasticsExchange expects to see a similar dynamic as the market drops. After months of moderate cost-push price increases, contract buyers will finally get a large chunk of it back this month, perhaps a dime or even more.

Read the full Market Update on the PlasticsExchange website.