Resin Pricing

The prospect of higher prices in February had buyers seeking end-of-the-month resin-buying opportunities, pushing the spot-resin market into swift trading at the end of January, according to The Plastics Exchange (TPE). Average spot polyethylene (PE) prices were steady to $0.02/lb higher, while polypropylene (PP) jumped $0.03/lb last week amid limited material availability and soaring feedstock costs.

Prices rose as a light-to-steady flow of spot material was offered last week, according to plastics spot-trading platform, The Plastics Exchange (TPE). Resin market activity was about average, according to TPE, and traders with old inventory on hand began asking more for their material, as buyers started coming to grips with the new reality of higher prices, after months of steady to lower markets.

In the roadmap for managing resins prices, I explained that risk management is a process whose purpose is to help achieve strategic and economic objectives (e.g. price certainty, increased utilization rates, hoped-for profit margins, etc.) Hedging is part of the process, and hedges should be executed after the objectives and a risk management policy are established.

Spot resin trading started slowly after the holiday break, but activity began to heat up by the end of the week, particularly for polyethylene (PE). Spot-trading platform, The Plastics Exchange (TPE), reported that fresh offers were hard to come by, with generic prime PE cars offered up $0.11/lb reflecting both the December $0.05/lb and January $0.06/lb price increases.

The resin markets floated quietly into year-end, with steady prices and few offerings, according to spot-trading platform, The Plastics Exchange (TPE). There were few new transactions completed in the holiday shortened week, and much of the market activity revolved around logistics, TPE noted, with market participants making sure producer railcars shipped ahead of the break and last-minute truckloads moved to processors.

Long-term energy price and supply projections are always suspect. But for most manufacturers exposed to energy and resins price risk, it's worth asking, "How low can natural gas prices go? " Consider these recent articles:

Low Gas Prices Spur New Chemical Plants (WSJ, 12-27-11)

Polypropylene (PP) prices in Asia last week were hammered lower, dropping due to muted regional buying, plentiful availability and softer feedstock costs, according to Polymerupdate. CFR Far East Asia prices of PP injection and raffia fell to $1255/tonne, a steep tumble of more than $60/tonne on the week. In South East Asia, prices of PP injection and PP raffia were assessed down at $1260/tonne CFR while CFR South Asia prices were assessed down at $1330/tonne.

The resin markets were a bit busier in the second-to-last trading week of the year, as suppliers looked to move moderate volumes of railcars ahead of the holidays and year-end.

Last time, Greg Ogborn, director of purchasing for Sunny Delight, shared some insights into how and why Sunny D controls its resins prices. Sunny D has a well-structured and coordinated risk management program whose primary objective is resin price certainty. Sunny D achieves price certainty using physical and financial tools (e.g.

"We are truly in the midst of a year-end market." That's how spot-trading platform, The Plastics Exchange (TPE) summed up resin trading last week, saying that overall the markets were fairly quiet, with significant interest lacking from buyers or sellers and prices holding steady. Polyethylene (PE) producers are generally offering spot railcars higher, reflecting their intent to implement a $0.05/lb increase. December polypropylene (PP) contracts are marked down $0.02/lb along with polymer grade propylene (PGP). The U.S.