Resin Price Report: Buyers Step Up, Making H1 2024 Strongest Market in Years

The spot resin market closed out June and, indeed, the first half of 2024 on a solid footing. Completed volumes remained elevated throughout the month, bringing the total tally at the PlasticsExchange to its highest level since May 2021, reports the resin clearinghouse in its Market Update for the week of June 24. 

Demand was reinforced by buyers procuring short-term material to process during the extended Fourth of July holiday weekend, as well as to build inventories as the hurricane season intensifies. Relatively few special end-of-the-month resin deals materialized, as producers focused incremental sales into the hot export market. Scant surplus supplies remained for domestic spot sales, at least at compelling prices, reports the PlasticsExchange.

June PE contracts resist clarity.

Prime polyethylene (PE) prices were steady to a bit higher, while polypropylene (PP) prices were unchanged though firm. Off-grade levels for both commodity groups continued to rise. Exporters had long sold out of their June allotments and began inquiring about July orders, expecting producers’ asking prices to rise a couple more cents. June PE contracts are still a little opaque: Producers have not budged from their proposed $0.03/lb increase and spot prices have been slightly higher, especially for truckloads. The PlasticsExchange said it faced some resistance selling Prime domestic railcars at the higher level.

PP contracts should confirm up $0.02/lb along with polymer-grade propylene (PGP) monomer, and the PlasticsExchange said it retains a bullish outlook on both PP and PE resin, expecting further price hikes in July: Spot supplies are limited, export demand shows no signs of flagging, and weather-related disruptions may well be on the horizon.

Robust PE resin trading.

As June drew to a close, PE trading remained strong, supported by healthy demand from processors and resellers alike competing for sporadic fresh supplies. Prime spot PE pricing at the PlasticsExchange trading desk was mostly steady with a firm undertone, though scarce low-density (LD) PE film grades edged higher. High-density (HD) PE was the main mover during the week, and was well spread among blow mold, injection, and high-molecular-weight grades. LDPE and linear-low-density (LLD) PE for film brought up the rear — there would have been more transactions if additional well-priced supplies could be found. Export prices ticked higher, as Latin American buyers continued to seek material while they waited for delayed cargoes from previous purchases from Asia.

Producers relentlessly push PE price increase.

Limited containers and ship space are pushing spot ocean freight prices still higher, and ships leaving from Houston have been jammed full. In the meantime, producers have been relentless in their push for a three-cent increase in June, as they try to convert some of the spot market pricing power. Large domestic buyers are resisting the increase, even as smaller processors seem to accept the rising costs, according to the PlasticsExchange. Adding to the upward pricing pressure, producers have nominated another nickel increase for July, partly to support the June effort, but also to put it on the books in case summer production disruptions develop.

Modest hike in PP contract prices.

PP took over as the more dominant spot resin in trading, with strong demand picking away at interesting supplies as they appear. Pricing was firm but the ascent paused as contracts settled up a very modest $0.02/lb early in the week, driving some larger processors to max out contracts rather than pursue additional spot material. Smaller buyers continued to order multiple truckloads, some for immediate consumption, but also to build an inventory buffer. The PlasticsExchange said that much of its completed truckload business the last week of June was filled from its market-making inventory, which it replenished as available. “Good off-grade, high-flow/high-izod co-polymer PP railcars sold immediately, with prices edging up higher. We consider supply/demand fundamentals tight and remain bullish on PP pricing, especially as propane dehydrogenation (PDH) issues persist,” said the resin clearinghouse in its Market Update.

Buyers in Mexico look north amid production disruptions.

Strong buying interest came from Mexico, as local production constraints limit resin availability and buyers look to the north for material. While PP prices in Asia seemingly are a good deal, high ocean freight to the United States and Mexico along with duty eliminate import incentives. While there is plenty of offline capacity in the United States to meet demand, any sharp increases in resin production would push snugly supplied PGP prices even higher. In turn, that could drive up highly correlated PP prices. Things could get very interesting as we move deeper into the summer when hurricane season becomes more active, though ocean temperatures are already abnormally high, notes the PlasticsExchange.

Read the full Market Update on the PlasticsExchange website.