Resin Price Report: Buyers Hit Pause as Close of First Quarter Nears

Spot resin trading activity continued to slow as the end of the first quarter of the year nears. After a very active start to 2024, completed volumes at the PlasticsExchange trading desk finally fell below average, and declining buying interest led to another drop in Prime polyethylene (PE) and polypropylene (PP) pricing, reports the PlasticsExchange in its weekly Market Update.

PP drops two cents

PE grades were down a half-cent, while PP dropped two cents, as spot polymer-grade propylene (PGP) monomer levels pulled back further. The flow of railcar offers remained light as producers continue to throttle back reactor rates and export as much of their surplus resin as practical.

The PlasticsExchange reports seeing sporadic spurts of specially priced deals, both PE and PP, which greased some transactions, but the offerings were not abundant. Unless the deals were sharp, processors in need of material opted for ready-to-ship truckloads, hoping for lower prices ahead. Export sales to Latin America started to feel the pinch, too, as buyers were less likely to chase material, opting to wait for more attractive prices, even if it meant procuring other resin from Asia.

In the meantime, the back-to-back two-week price drop will make March contract negotiations more interesting, as PE producers mostly look to implement a $0.03/lb hike after the rollover in February, according to the PlasticsExchange. March PP contracts, on the other hand, remain on track for another cost-push increase, which has trimmed as the month wore on. The current target is a milder three-cent increase.

PE prices fall a half-cent

PE trading slowed, as buyers resist further price escalations, stalling the market’s upward momentum. PE prices slid a half-cent across the board, and it seems unlikely that producers will be able to implement their mostly $0.03/lb price increase currently on the table for March, but stranger things have happened, notes the PlasticsExchange.

The fragmentation of the resin market felt quite pronounced, as some producers and resellers have essentially been sold out while others still had some enticing deals. Export orders continued to flow, but the PlasticsExchange has observed pushback on pricing, which has made transactions more difficult, particularly in light of limited prompt availability. Added liquidity should begin to appear as sellers begin to pre-sell for April, added the resin clearinghouse in its Market Update.

Resin rally peaks

PP trading activity was reduced alongside weakness in upstream PGP monomer levels, leading some buyers to take a step back in the hope of cheaper prices ahead. The steady and fairly steep rally appears to have found its top as cost-push pressures have started to subside. Prices at the PlasticsExchange were relatively quick to react, shedding another $0.02/lb last week, bringing the two-week loss to $0.04/lb, right back to month-ago levels. The lower prices helped spur incremental transactions, though completed volumes were well off the pace enjoyed year to date.

Once again, the majority of PP sales at the PlasticsExchange the week of March 18 came from its market-making inventories, which have now been drawn to the tightest levels in at least six months. While spot monomer prices have given back their March gains, sharply higher spot costs in the first half of the month will still translate to a PP contract increase this month in the $0.03/lb range.

April PGP prices are already pointing to a decrease ahead for next month, but monomer supplies are still generally tight and could return higher again if another production hiccup were to develop, cautions the PlasticsExchange. It expects relatively good ongoing PP demand along the way as processors procure spot material to get them by while they wait for contract levels to subside.

Read the full Market Update on the PlasticsExchange website.