Resin Price Report: Prices Drop Amid Relatively Mild Hurricane Season

Buying slowed in the spot resin market last week, reports the PlasticsExchange in its Market Update, as Hurricane Francine veered east, away from Texas, the heart of US plastics production. While resin run rates in the Gulf Coast were slightly reduced as a precaution early in the week, the plastics industry seemed to skate by mostly unscathed. Instead, Francine hit Louisiana the morning of Sept. 11, leaving 400,000 people without power and causing an estimated $1.5 billion in damages. By Friday the 13th, several resin producers confirmed little to no impact to their operations. This gave processors some relief: The threat of a major hurricane season, for which many stocked up with extra material well in advance, had passed its official peak with relatively few issues to date. While the storm season is far from over, there was a collective sigh of relief as another bullet was dodged.

The reduced need to purchase buffer material was a contributing factor to lower prices for Prime polyethylene (PE) and polypropylene (PP) at the PlasticsExchange trading platform. PE commodity resins dropped a half-cent to a full penny amid growing supplies and unenthusiastic demand, while PP resins were down one to two cents, as monomer cost relief continued.

Overall availability remained healthy, but some select grades were still somewhat snug. Export demand stayed strong as well, though competitive pricing out of the Middle East and Asia weighed on international prices, complicating offshore sales.

Record PE resin production

Preliminary data from the American Chemistry Council (ACC) released for August showed that despite restricted spot monomer supplies, producers ran their resin reactors hard, making the most PE on record. Exports were up 4% and accounted for about 46% of total sales, while domestic sales were down 2% from July but still well above the 12-month average. When the dust settled, August PE inventories had risen by 4%, back above seven billion pounds for the first time since May.

Domestic PP sales at highest level since August 2021

For PP, preliminary data for August showed resin reactors improved to more than 90% for the first time since August 2021. Domestic PP sales reached their highest level since August 2021, while PP exports dropped nearly 14% from July. Domestic inventories showed a meaningful 4.5% build, bringing upstream stocks back up to the highest level since March of this year. Readers are encouraged to subscribe directly to the ACC for a more detailed look at production and sales data.

PE trading slows

PE trading slowed from the strong September start seen just a week earlier, writes the PlasticsExchange, although a typical volume of resin still changed hands. Resellers selectively offered Prime domestic railcars from their forecasted commitments while a steady flow of off-grade railcars and trucks were priced at nice discounts, which encouraged buying.

Most PE commodity grades were down a half-cent, but low-density (LD) PE and linear-low-density (LLD) PE Injection grades became a bit more available and lopped off a full cent. LLD PE was the main mover of the week at the PlasticsExchange, spread between Film and Injection grades. LD PE Film also had a good showing, while fewer high-density PE deals were made. Export requests remained strong, but buyer price expectations kept sliding because of competitive offers from Saudi and Chinese suppliers, challenging incremental reseller sales from the US.

On the contract front, August PE was finally confirmed at a rollover, so there is technically a dime on the table as the August and September nickel nominations became stacked, writes the PlasticsExchange.

PP trading was tempered for another week compared with PE with a combination of contributing factors paving the way. The lighter trading came amid minimal impact on production from Francine, allowing processors to continue working off larger on-hand resin supplies they had built up over the past few months.

Substantial price decrease anticipated for PP contracts

Spot polymer-grade propylene (PGP) monomer costs also continued to fall as PGP production improved, providing buyers with confidence that the recent string of contract price increases has ended at three months and $0.09/lb. A considerable price decrease, which seems to be building, should be forthcoming for September contracts. Prime homo-polymer PP peeled off a couple of cents and copolymer (Co) PP a penny, bringing monthly spot losses to three cents in the process. It’s worth noting that the drop in pricing comes while Ineos and Invista are still officially on force majeure. Tightness for CoPP remains, however: Patient buyers have slowed their purchases or reduced their volumes ahead of lower price expectations. 

In the meantime, those in need of quick shipments will find supplies to remain rather tight, with premiums for packaged material.

Read the full Market Update on the PlasticsExchange website.