Resin Price Report: Bountiful PE Deals Energize Trading During Thanksgiving WeekResin Price Report: Bountiful PE Deals Energize Trading During Thanksgiving Week

Spot resin trading continued at a rapid pace through the middle of the week of Nov. 25, and then, predictably, dropped off as folks in the United States celebrated Thanksgiving.

The flow of resin offers was much lighter after producers seemed to complete another round of inventory liquidations, reports the PlasticsExchange in its Market Update. Relatively few Prime domestic railcar offers showed up, although a thinning stream of off-grade cars were made available.

Prime PE, PP prices hold the line

Prices for Prime polyethylene (PE) and polypropylene (PP) held steady as sentiment improved. Many participants share the belief that the market will find its bottom in December and rebound into the new year.

Export demand was strong, while sellers looked to line up December sales and book ocean-bound shipments before the end of the year. Chinese buyers came out in droves to secure cargoes to arrive before the Lunar New Year holiday, which begins in late January. Houston-area warehouses are still jammed full, backing up railcars and creating packaging delays. Much of the industry’s packaged stocks inventoried in the gulf area are committed for export, but some ships have skipped the Houston port, causing large volumes of outbound containers to be rolled to future bookings, reports the PlasticsExchange.

Related:Resin Price Report: Downward Pricing Trend Expected to Hit Bottom This Month

Robust PE trading

PE activity dominated the spot resin market during the holiday-shortened week, as buyers sought special deals while suppliers with pounds to sell were happy to pad their November totals. The PlasticsExchange said it posted solid volumes in November, second only to October. Completed volumes for PE were considerably above usual levels at the trading desk. The majority of business went into the export market for the second straight week, although some domestic buyers also secured Prime and off-grade lots.

Spot prices held steady the last week of November and the tone was more upbeat. Some buyers initially pressed for lower prices, only to find later that existing offers had already sold, leaving demand unsatisfied going into the holiday weekend, according to the PlasticsExchange.

Business was skewed toward linear-low-density PE, spread over Film and Injection grades, besting the totals for low-density and high-density PE combined. Producers pushed hard to clear out some of their bulging inventory during November. The PlasticsExchange said it expects to see more material purged during the first part of December, as well, but to a lesser degree. 

It will be interesting to see if resin reactor operating rates were reduced in November to complement the strong upstream sales effort, commented the resin clearinghouse. In the meantime, current contracts have yet to settle. Despite general market weakness and plentiful material availability, which could easily justify additional relief after the October three-cent decrease, the PlasticsExchange expects PE producers to manage a rollover of contract prices for the month.

Below-average activity in spot PP transactions

Spot PP business slowed considerably from the heavy trading seen a week earlier. Completed volumes at the PlasticsExchange trading desk slipped below average, with just a handful of notable deals finalized. The flow of offers also dropped considerably: Generic Prime railcars were not seen during the week, though sellers were willing to book December railcars on a polymer-grade propylene (PGP) plus basis, but not with outright pricing. There were some off-grade railcars, but overall interest from both buyers and sellers was muted.

Prime homo- and copolymer PP pricing didn’t budge the week of Nov. 25: It was down $0.03/lb during November and has fallen a hefty $0.13/lb since peaking in late August, largely dragged down by lower monomer feedstock costs. There seems to be a little more downside ahead in December, and then monomer prices are slated to head higher starting in January, according to the PlasticsExchange. There should be some good buying opportunities during the next couple of weeks before producers pack up for the end of the year.

Three-month drop in PP contract prices

PP contracts will confirm a third straight monthly price decrease: A $0.035/lb decline is anticipated for November, bringing the three-month string of relief to $0.145/lb, surpassing the previous three months of price increases totaling $0.09/lb from June to August.

Read the full Market Update on the PlasticsExchange website.