Resin Price Report: Producers Looking for Third Straight PE Price Hike

The solid October start downshifted last week, as spot resin trading slowed, reports the PlasticsExchange in its Market Update. Polyethylene (PE) prices were steady to a penny higher, while  polypropylene (PP) jumped $0.02/lb, reflecting rising monomer costs. Interest remained strong, but deals were harder to complete and transacted volumes at the PlasticsExchange trading desk slipped back toward the levels seen in the earlier part of the year.

Processors pull back

There was a lot more quoting than trading, and it seemed that some processors were just taking the temperature of market conditions, writes the PlasticsExchange. Demand for packaged truckloads outpaced railcars. This came after a previous surge in demand, including some precautionary buying following the Hamas terrorist attack against Israel and the potential for the conflict to expand regionally. Though volatile crude oil prices have remained elevated, keeping upward cost-push pressure on international resins, the export market seemed to lose a little of its upward momentum when prices came off their highs earlier in the month. Producers reportedly remain steadfast in their effort to implement a third straight $0.03/lb PE price increase, while PP contracts will  endure another monomer-led price hike, which is now targeting around $0.06/lb.

Some PE resin prices edge higher

The PE market remained firm, and while transacted volumes pulled back from the high levels seen during the first half of the month, some prices still edged higher. Demand improved for low-density PE, both film and injection grades, each of which picked up a half-cent. High-density PE, which mostly saw steady pricing, was the flavor of the week. Blow molding material was the biggest mover, according to the PlasticsExchange, and high-molecular-weight PE for film gained a penny, reflecting snug supplies.

PE availability poised to improve

Overall exports still remain very good and continue to support the market, though incremental demand has eased and buyers have pushed back a bit against rising prices. Producers moderated PE reactor rates in September amid continued heavy exports to record sizable back-to-back inventory draws. The balanced-to-tight supply/demand conditions have encouraged producers to seek another 3-cent price increase for October. Meanwhile, Nova and CP Chem remain on a force majeure, though CP Chem recently restarted its previously offline high-density PE unit in Texas. Baystar’s newly commissioned PE unit in Texas will also bring more supply into the market and should improve overall availability. Shell’s Prime production, however, has been inconsistent, and much of the industry’s new production in recent years has been geared toward the export market.

PP trading started the week slowly but finished strong. Activity increased mid-week when the price of polymer-grade propylene (PGP) jumped as buyers sought to secure more spot material ahead of the imminent October contract price increase, which began growing in magnitude. Some suppliers were pleased to sell into the better buying behavior, while others pulled their packaged offers and scattered.

Prime PP resin adds another $0.02/lb increase

Off-grade railcars continued to flow and were bid up. Prime PP railcars were somewhat difficult to procure. Producers have throttled back production, so availability has been tighter, and while fresh cars can be made to order, the margin over monomer has been expanding. By the end of the week, Prime PP prices had added another $0.02/lb, bringing current levels to $0.08/lb above the July low, reports the PlasticsExchange.

The resin clearinghouse said it maintains the bullish stance it has held since the summer. “Producers’ collective PP inventories entered October at the lowest point of 2023 and we believe that downstream inventories have been drawn down significantly, leaving the market susceptible to supply-chain disruptions, like the current PGP situation,” notes the PlasticsExchange in its Market Update. October PP contracts are poised to jump around $0.06/lb and producers are starting to get serious about implementing a margin-enhancing increase, as well.

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