Resin Price Report: PE Price Increase Now Uncertain

Commodity resin deals are rocking, the PlasticsExchange reports in its Market Update. As of the week of Feb. 19, completed volumes at the resin clearinghouse have already pushed past January results and surpassed all of February 2023.

Polyethylene (PE) prices mostly rocked steady, with notable firmness in high-density PE, while polypropylene (PP) stepped up another cent in line with rising polymer-grade propylene (PGP) costs. Spot resin availability was mostly snug: Producers have been very disciplined with production and exporting as much as they can. A light flow of Prime and off-grade PE and PP railcars came to market, some at surprisingly favorable prices. Most of them moved. A stream of export requests came from Mexico, South America, and Europe, where the sales arbitrage is open. It is uncertain whether PE producers will implement any of their February increase, writes the PlasticsExchange. Meanwhile, PP contracts are poised to rise about $0.04/lb, a reflection of this month’s jump in monomer costs.

Solid week for high-density PE

PE trading maintained the robust pace seen for the better part of the past five months, with the exception of November. Given the strong global demand for PE amid logistics issues and high freight costs from other regions, export sales were still producers’ preferred outlet for incremental pounds, limiting surplus material from weighing on the domestic market. High-density (HD) PE had a solid week, only to be outdone by linear-low-density PE, while low-density PE was more of an afterthought. Most prime PE grades were flat but firm, though HDPE for Blow Molding rose another cent.

“We have seen a steady rise in spot PE prices this month,” writes the PlasticsExchange, “and indeed our spot prices had to stage a little catch up in February to match the nickel contract increase realized in January.”

PE sellers ease up on proposed nickel increase 

Resellers made available a few prime PE railcars at prices that were slightly softer than early- to mid-month levels. While overall bullish sentiment has kept upward pressure on the market, it has not been enough for producers to secure their entire nickel nominated for February, according to the PlasticsExhange. In fact, it said in its weekly Market Update that it has seen at least one official letter easing the rise to $0.03/lb while seeking an additional $0.03/lb in March. It is uncertain whether any will actually stick this month, said the PlasticsExchange, but some larger processors that might have been sheltered in January will probably absorb that increase this month.

Another force majeure on PP

PP had a strong trading week, spurred by scarce supplies and rising monomer costs. Availability tightened up even more in the back half of the week following Braskem’s force majeure announcement. This is the second producer in two months to have declared a force majeure on PP.

Some good off-grade copolymer PP railcars came to market and were scooped up at ever-rising prices. While prime PP could be found, the margin over monomer has been expanding in the spot market. Prime copolymer PP 20 Melt No Break was the largest mover. Prime PP spot levels lifted a penny by midweek, which held into the weekend. February PP contracts will follow PGP monomer up about $0.04/lb, and producers, who have regained some pricing power, are seeking to expand their production margin by $0.02 to $0.03/lb in March.

After a difficult 2023, producers’ production discipline these past few months, in the face of rising costs, has put them in the position to reap a little reward, writes the PlasticsExchange.

Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website.