Resin Price Report: Bargains May Be Coming to an EndResin Price Report: Bargains May Be Coming to an End

A relatively heavy flow of off-grade railcars at well-discounted prices led to another busy week at the PlasticsExchange trading desk. Prices on all of the prime polyethylene (PE) grades remained unchanged, though export prices continued to slip, reports the resin clearinghouse in its Market Update. Polypropylene (PP) prices peeled off another two cents the week of Oct. 7, amid increased availability and ongoing weakness in spot monomer. 

Another Gulf of Mexico hurricane avoided the Texas/Louisiana coast and again hit an already beaten and battered Florida. Hurricane Milton, a Category 3 storm, came just two weeks after the devastating Hurricane Helene. It has taken this late surge of activity to live up to extreme hurricane forecasts, and the season is not over yet with two more storms brewing in the Atlantic and Caribbean at the time of writing.

PE trading had another strong week. Amid good availability, buyers gave the cold shoulder to high-priced resin but welcomed well-priced offers with open arms.

Strong export interest in PE

Railcars drove much of the completed volumes, again outstripping the packaged truckload business at the PlasticsExchange. Linear-low-density PE for film and injection moved the most. Despite still scarce low-density PE supplies, buyers mostly resisted the premium offers hoping for cheaper prices ahead. Aside from typical domestic business, there was strong export interest and solid sales to a variety of international locations including Europe, Latin America, China, and Africa, as producers liberally discounted resin for offshore sales. On the home front, US buyers pushed back against any thoughts of an October increase, with some chatter developing regarding an overdue price decrease.

A first look at preliminary September supply/demand data from the American Chemistry Council (ACC) reveals healthy supply positions. Though PE producers throttled back reactor rates significantly, making 300 million fewer pounds than in August, sales were lower, too, but still generally solid, according to the PlasticsExchange. Exports were down 5% from August but still accounted for about 45% of total sales. Meanwhile, domestic sales were down roughly 2% from the previous month. When the dust settled, final September PE inventories saw another substantial build to a new record level, and it’s being felt in the market.

Spot PP prices drop some more

Spot PP maintained its active pace, and an above-average volume of resin changed hands as prices for both homo-polymer and copolymer PP resins dropped further, particularly for off-grade material. Price levels for packaged truckloads eased up, too, although prompt delivery still commanded a premium.

The continued price decline comes not only on the back of another upstream inventory build during September but also on downward price pressure from polymer-grade propylene (PGP) monomer costs, said the PlasticsExchange. Some buyers went for the discounted railcars for October and November processing, while others continued to chip away at inventory accumulated in case of weather-related supply disruptions during hurricane season. Traders were generally seeking to sell off their warehoused material and not quite ready to restock.

Sharp reactor rate cuts in September 

According to preliminary data released by the ACC for September, reactor rates were cut sharply, just about matching the drop in domestic sales prompted by buyers waiting for additional price relief in October. There was little interest in PP exports outside of Mexico, only accounting for 4% of total PP sales. By the end of the month, there was a small upstream inventory build, but producers’ stocks were still about 100 million pounds below March levels. For more detailed production and sales data, the PlasticsExchange recommends subscribing directly to the ACC.

September PP contracts were down $0.04/lb, and a slightly larger decrease is expected to come through this month. If the October decrease is steep enough, it could very well mark the end of the price decline for this cycle, according to the PlasticsExchange.

Read the full Market Update, including the latest news about monomer market activity and the major energy markets, on the PlasticsExchange website.