Resin Price Report: February Brings Out the Bulls

The PlasticsExchange reports solid business in the spot resin markets as January slipped into February — last month’s results surpassed January 2023. Bulk railcars accounted for the majority of completed volume, but a growing convoy of packaged truckloads also changed hands, according to the resin clearinghouse’s Market Update.

A bullish shift in sentiment came midweek, just as the calendar turned. Leading into month-end, there was some negativity on the seller side stemming from well-discounted polyethylene (PE) and polypropylene (PP) railcars, mostly off grade but some Prime, as well. The market tone became more positive when February began: Producers raised railcar asking prices and export offers jumped, too. It is not unusual for prices to change month to month, but it was very noticeable as it came midweek amid an active market, said the PlasticsExchange.

Exports shore up resin prices

Producers were not shy with their increases, as they have excellent alternative demand coming from the export market. The spot market reacted to the upside, with PE picking up a cent late in the week and PP piling on another penny and a half, recovering the previous week’s losses to return to season-high levels. Buyers were unfazed by the rising prices and the steady order flow continued in early February.

A large number of resin requests came from international buyers, who have started to concede to higher levels as global prices climb, largely spurred by escalating ocean freight costs as a result of logistics constraints in the Red Sea and the Panama Canal.

Spot PE prices rise at start of the month

Spot PE trading was good — end of the month railcar deals were scooped up by midweek and replaced with higher asking prices as February began. Overall domestic availability has been a little lighter as producers divert incremental pounds into the export market, causing buyers to become more proactive when seeking resin. Demand from Latin America, particularly Mexico, was healthy as local processors looked north for reliable supply while they faced shipping delays and rising costs from the Middle East and Asian regions.

Spot prime PE prices at the PlasticsExchange have risen about $0.03/lb since mid-December and have upward momentum. The lower end of the market has rallied even more while export prices have risen about a dime in the past 45 days, lending growing support to producers’ price increase initiatives.

Nickel increase on table for PE contracts

It is still uncertain how January PE contracts will settle ultimately. The major indices have indicated flat to up by $0.05/lb. Producers would be happy to fully implement a nickel increase for January, and there is another $0.05/lb on the table for this month. There are also more official and unofficial non-market adjustments at hand, so it is difficult to gauge how much of an increase larger processors will really take for January, writes the PlasticsExchange.

PP resin prices recoup loss from previous week

Demand was robust in the PP market — the vast majority of well-priced railcars on offer cleared by the end of the month. PP prices regained the $0.015/lb it lost just a week earlier as availability thinned and monomer costs firmed.

Upstream resin stocks have been healthy, although some of that resin is being held for upcoming turnarounds. Also, the Ineos force majeure remains on PP from its Chocolate Bayou complex, which faced equipment issues during the recent Houston freeze. Reseller stocks of readily available resin continued to dwindle, as buyers scooped up most remaining favorably priced Prime lots. While the bottom of the pricing spectrum lifted higher, some less desirable material like low-flow off grade and transitional materials remained priced around monomer.

Prime packaged homo- and copolymer PP truckloads have become quite scarce, as have high-flow and high-impact copolymer PP railcars. The top end of the Prime railcar market trimmed a tad as producers cut deals at tighter margins while they sought larger orders to line out their reactors for February and March. Meanwhile, January PP contracts followed polymer-grade propylene (PGP) $0.03/lb higher and producers have nominated as much as a four-cent margin-enhancing increase in February.

Read the full Market Update on the PlasticsExchange website.