Resin Price Report: Buyers Go Meh as End of Year Nears

The spot resin market ended November with a pretty good showing compared with recent weeks, but still below the 2023 and historic averages at the PlasticsExchange trading desk. Sluggish activity seemed to be the norm in the resin markets the week of Nov. 27. That can be partially attributed to seasonal de-stocking and position balancing into year-end, reports the PlasticsExchange in its Market Update.

Polypropylene (PP) prices slid another cent, while polyethylene (PE) levels held steady. It is worth noting, however, that there were deep discounts on month-end PE railcars, and sellers were fairly keen to deal on price for volume. There was ample railcar availability for most PE commodity grades as well as packaged Prime truckloads ready to ship. PP quantities on the other hand were limited.

Three-cent increase gets another thumbs’ down

November contracts were mostly finalized during the week, with PE shrugging off producers’ three-cent price increase attempt as well as processors’ call for a similar decrease to simply roll over flat from October. By contrast, PP contracts endured their third straight cost-push monthly increase, jumping a full nickel, in line with the rise in polymer-grade propylene (PGP) contracts. PE trading was considered light, buy orders trickled in against increased availability, and prices managed steady with a weak undertone. There was a steady flow of offerings, including some Prime railcars from resellers who shaved their asking prices in an effort to move forecast-yet-unsold resin, rather than take the extra material into inventory. However, the discounts did not overly excite many processors, some of whom claimed to have enough material in stock or on order to satisfy their needs through the end of the year. The PlasticsExchange reports seeing some solid buying from its consistent customers who source the bulk of their needs for commodity resins from the resin clearinghouse.

Producers keep operating rates on the down-low

Linear-low-density (LLD) PE and low-density (LD) PE film grades were the biggest movers, while high-density (HD) PE for blow molding also sold well, according to the PlasticsExchange. Producers seem to have their finger on the pulse of market conditions, remaining cautious with their operating rates during November as they try to keep domestic stockpiles from swelling amid slow late-season demand. They also reacted well to the decline in international PE prices in October and November by dropping their export prices to remain competitive on the world stage. A healthy amount of spot export requests came from international resin buyers, but there was much more quoting than buying, and the PlasticsExchange said its best sales went to Mexico.

One more price hike in 2023 unlikely 

Perhaps thinking the third time’s the charm, producers are expected to give their twice-tried $0.03/lb increase another shot in December. Unless something comes to shock the market, the PlasticsExchange said it sees little chance to implement another hike in 2023. While there have been unofficial discounts afforded to buyers from the $0.09/lb of net increases implemented this year, perhaps Santa will bring buyers some official relief in December in the form of a decrease. It’s also quite possible that Scrooge will block the way.

The spot PP market saw good turnover as November came to a close: Prices eased another cent, which was welcomed by buyers who came to the market with orders in hand. There was a lighter flow of off-grade railcars for sale, and contrary to the PE market, few Prime railcars needed a home late in the month. The PP market has actually been feeling quite snug, as producers have kept their production in check to match demand, which waned as PP contract prices have risen $0.135/lb since September. Completed volumes at the PlasticsExchange last week tallied the highest since early October. The orders were mostly for Prime and were equally spread between homo- and copolymer. Sales were also well split between processors and other resellers in need of material to fill in supply gaps.

While resellers were buying truckloads for immediate needs, they were also out to pre-sell December railcars and get an early start on the month. The spot PP market topped out in November, as spot monomer prices gave back a chunk of their gains, but there has also been a significant inventory drawdown throughout the chain, leaving the market tightly supplied and vulnerable to monomer or resin production disruptions.

Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website.