Resin Price Report: Polypropylene Prices Ease as New Month Gets Underway

The spot resin market woke up as September began, with participants returning from the Labor Day holiday coming out in full force, reports the PlasticsExchange in its Market Update. A good flow of fresh railcars were offered the week of Sept. 2, and suppliers were more willing to deal on price, facilitating transactions.

Polyethylene (PE) levels were generally a half-cent lower, while polypropylene (PP) slid as much as $0.02/lb, helped along by easing polymer-grade propylene (PGP) costs.

The lower resin prices spurred demand, which led to higher than normal completed volumes, particularly for PE. Processors stepped right up, some to make normal monthly purchases while others needed quick truckload shipments. Overall availability was healthy, but a handful of select grades remained somewhat snug.

Although export demand improved and resin requests were plentiful, pricing was weak: Heavy selling out of the Middle East and Asia has been pressuring the international market, aided by falling Crude Oil prices and relatively reduced freight rates.

PE producers continue to pursue their August price increase efforts, and yet another increase is nominated for September. PP contracts confirmed a $0.02/lb cost-push hike, the third straight monthly increase, but it is looking like some price relief is in store for September. However, we are also at the peak of the hurricane season, and there are three disturbances out there, one of which was headed toward the Gulf of Mexico at the time of writing.

Most PE commodity grades shed a half-cent

PE trading got off to a strong start. Producer prime railcar offers began the month reflecting a $0.05/lb price increase, while off-grade railcars, still priced at a nice discount, racked up sales. Other buyers were happy to scoop up well-priced Prime truckloads from the PlasticsExchange spot market, and deals were well distributed between high-density (HD) PE injection and low-density (LL) and linear low-density (LLD) PE for film. Most PE commodity grades peeled off a half-cent, with the exception of injection-grade LDPE and LLDPE, where availability has been exceedingly scarce. Some processors continue to resist higher asking prices and opt, instead, to work down their on-hand inventories.

The PlasticsExchange said it has been fielding elevated export requests, but buyers’ price expectations have been sliding faster than producers’ willingness to make discounts for incremental business, especially with spot ethylene costs running into the mid-$0.30s/lb. 

The margin squeeze should keep reactor rates moderated to maintain a relatively well-balanced supply/demand dynamic in the domestic market, according to the PlasticsExchange.

Producers push for nickel increase on PE contracts

August PE contracts have not yet settled, although producers continue to push for a full nickel increase. If it is not implemented, the increase would roll to September, where another nickel already has been nominated. With a storm currently approaching the exceptionally warm water in the Gulf of Mexico, both increases could come into play.

PP trading was tempered compared to PE, as slower sales continued into September. Converters were treated to lower spot pricing: Homo-polymer (Ho) PP came off a penny and copolymer (Co) PP dropped a couple of cents, relinquishing a little bit of its expanded premium. Although Ineos and Invista remain on force majeure, availability should begin to improve, notwithstanding additional disruptions, as offline reactors return to production.

While spot availability is still rather tight, particularly for CoPP, buyers with patience have slowed their purchases or reduced their volumes as they eye lower prices ahead. Propane dehydrogenation units appear to be running better, which has contributed to a pullback in spot monomer costs for September. Barring any additional issues, the series of cost-push price increases seems to have stopped at $0.09/lb over the past three months, with September setting up for a moderate decrease.

Storm watch

As the eye of Hurricane Francine approached the coast yesterday, several chemical companies shut down plants in Louisiana, reports global commodity intelligence firm ICIS:

Louisiana is home to approximately 25% of total ethylene capacity in the United States, according to ICIS.

After making landfall, Francine turned nearly due north and by 1 a.m. today, the center of the hurricane, downgraded to a tropical storm, passed northwest of New Orleans en route to Mississippi, where it was classified as a tropical depression, according to Nola.com.

Read the full Market Update on the PlasticsExchange website.