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Resin Price Report: Prime PE, PP Prices Move Higher

Meanwhile, several petrochemicals companies declare force majeures at facilities in Mexican state of Tamaulipas.


June 7, 2024

4 Min Read
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Despite a holiday-shortened week because of Memorial Day, completed volumes at the PlasticsExchange again ran above average and Prime prices for both polyethylene (PE) and polypropylene (PP) moved higher. Spot railcar supply was a tad disappointing, as there were relatively few end-of-month specials. Demand remained robust as processors sought resin for near-term use and building an inventory buffer since June 1 is the start of hurricane season, reports the PlasticsExchange in its Market Update for the week of May 27.

Disruptive storms tend to be later in the summer and fall, but Houston has already been hit with nasty weather the past several weeks. While those storms avoided the petrochemical-laden areas, they still served as an early wake-up call.

There was solid spot truckload demand from resellers, too, in order to tide over customers contending with very late railcar shipments, which has been an ongoing trend.

PP contract prices expected to drop.

The PlasticsExchange anticipates that May PE contracts will roll flat, but there is still some variance in the industry as the two major indices diverged on price in April. It expects PP contracts to follow polymer-grade propylene (PGP) contracts a bit lower — analysts at the resin clearinghouse have been targeting a $0.02/lb decrease for the past few weeks and are confident in their call.

Related:Resin Price Report: Houston Storm a Prelude to Hyperactive Hurricane Season?

International traders have been eager for new supply, even as they try to bid the market lower. On the contrary, US producers probably will seek a $0.01 to 0.03/lb bump up in June export prices.

PE prices climb a cent.

PE trading activity remained elevated as May drew to a close, with spot demand exceeding well-priced supplies and prices rising. A steady flow of buyer inquiries reached across all commodity grades and a large volume of resin changed hands. Low-density (LD) PE Film took over as the main mover at the PlasticsExchange, followed by high-density (HD) PE Blow Mold and Injection. Linear-low-density (LLD) PE Film had stronger interest than turnover, as buyers resisted rising prices. Several groups of Prime railcars were offered in the domestic and export markets, some at noticeably favorable costs; once sold, they were not repeatable at the same price level. Prices stepped a half-cent higher midweek and gained another half-cent on Friday as the month ended.  

Spot PE prices began the month a bit soft, and most grades dropped a cent early on, but the market firmed as the month wore on. They mostly netted flat to a penny higher when all was said and done.

Last week’s penny gain came alongside still rising freight rates and shipment delays from Asia, which shifted some extra demand to the US export market, buoying Houston prices. June offers for both domestic and export markets are expected to begin higher with limited incremental volumes available to resellers.

On the domestic contract front, May settlements are expected to be finalized this week. Producers have pushed for a three-cent increase to make it fully market wide, and it will be interesting to see what the two largest indices come out with, especially after the flat to three-cent spread that was established between them in April, writes the PlasticsExchange. “When the dust settles, we anticipate April/May contracts to still be steady to $0.03/lb higher, with perhaps some interim non-market adjustments growing. Whichever way it officially settles, producers will keep upward pressure on contract prices during June,” writes the PlasticsExchange in its Market Update.

The spot PP market saw heightened activity the final week of May, with good deals being snatched up very quickly. Late-month railcar supplies at early May prices were unavailable; Prime cars, in general, were sparse, even at a mildly higher cost, and much of the liquidity came from suppliers’ warehoused inventories.

US, Mexico buyers scoop up PP.

Strong PP demand came from both US and Mexico buyers, which outstripped current supplies. Prime prices at the PlasticsExchange rose $0.015/lb. Though some off-grade railcars were available, most producers were already done selling spot Prime railcars for May and started pricing into June at somewhat wider margins over PGP monomer.

As has been the trend for some time, availability of high-flow homo- and copolymer PP has been very scarce and difficult to source. Both the PP resin and PGP monomer markets are well-balanced to tight and if producers were to increase operating rates significantly it would put upward pressure on monomer costs. Meanwhile, the May PP contract is likely to be finalized at a two-cent decline commensurate with the drop in PGP monomer. The PlasticsExchnange said it has a bullish outlook on spot PP pricing from here.

To read the full Market Report, go to the PlasticsExchange website.

Force majeure declarations multiply in Mexico.

The severe drought in Mexico’s Tamaulipas region continues to affect the petrochemicals industry in the Altamira production hub. Force majeure declarations have multiplied as local officials cut back on water supply to area businesses.

Business intelligence firm ICIS reports that chemicals company Cabot Corp. has declared a force majeure on carbon black from its Altamira facility, adding to a string of such declarations in the past couple of weeks. “The crisis could end up hitting US petrochemicals, as the state [of Tamaulipas] is a key supplier to that market,” writes Jonathan Lopez on the ICIS website.

Other recent force majeure declarations have been issued by M&G Polimeros (PET), Orbia/Vestolit (PVC), Sabic (ABS), Ineos Styrolution (ABS and general purpose polystyrene), and Chemours (titanium dioxide). 

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Informa Markets Engineering

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