Resin Price Report: Producers Seek Five-Cent Hike in PE Contracts

After a hectic first half of the month, spot resin trading maintained the more relaxed pace observed in last week’s Resin Price Report.

Prime polyethylene (PE) and polypropylene (PP) prices held firmly flat at the PlasticsExchange. The resin clearinghouse reported in its Market Update that it continued to see the bottom side of the spectrum shore up, as lower end buyers conceded to rising levels. A good number of railcars were sold to processors stocking up for the next 30 to 60 days, while ready to go packaged truckloads served more immediate, and in some cases urgent, needs. Some of the orders can be attributed to supplemental inventory buys as a hurricane-season buffer. Storm systems that hit the Pacific, Atlantic, and Caribbean fronts have had no impact on resin production, but at the time of writing, Tropical Storm Idalia could threaten the Gulf Coast and Florida.

Are exports being consumed or stockpiled?

The flow of fresh offers stayed slow, as producers seem to be circumventing the traditional reseller channels and selling more spot resin directly. The PlasticsExchange said it is seeing this trend in both domestic and export markets. Strong international demand for US resin has been absorbing much of the surplus resin that producers have sought to move. The question remains, however, if these cost-advantaged exports to Latin America, Europe, and especially China are actually being consumed or just positioned offshore for future sales?

PE volumes maintained their moderate yet relatively good pace from a week earlier, even as both buyers and sellers have taken a step back from their more aggressive activity seen earlier in the month, writes the PlasticsExchange. Prices for all PE grades were steady, holding at two cents above the market low established in July. Upstream inventories seem to be plentiful, but spot resin availability has been more limited — perhaps producers are holding back material, wonders the PlasticsExchange.

CP Chem declares force majeure

Well-priced wide-spec railcar offers, particularly high-density (HD) PE fractional melt, were hard to find as major resellers continued to grab available material to cover orders taken earlier in the month. There is some reduced output out of Orange, TX, following CP Chem’s force majeure a week earlier. There is also an HDPE production disruption in Canada. Linear-low-density PE Injection and Film remained the major movers for a third straight week at the PlasticsExchange trading desk, outshining sales for HDPE and low-density PE resins.  

Though not yet finalized, August PE contracts were trending toward a rollover, which would leave contracts up $0.03/lb for the year, according to the PlasticsExchange. More producers joined in the collective push for a five-cent increase for September, as sellers have begun to regain some pricing power. The increases are logically in place in case a major tropical storm or hurricane develops in the petrochemical producing part of the Gulf.

PP resin prices stay flat

PP trading was solid and prices held flat for the second week in a row, maintaining their two-cent bump over cycle lows. Demand chased limited availability, and producers have ratcheted up their asking price over monomer costs in the spot market, hoping to implement a margin-enhancing $0.03/lb increase for contracts. 

Prime copolymer PP was the main mover. The PlasticsExchange said it has also seen growing interest in homopolymer PP resin from both domestic and Mexican buyers. Supply and demand seem to be balanced, leaning toward a shortage in supply. While the bottom part of pricing has continued to firm, aside from certain hard-to-find grades like copolymer PP High Flow and 20 melt No Break, the top side of the market has not advanced any further, according to the PlasticsExchange. Reseller stocks of packaged PP resins have been very tight and some restocking efforts have been observed.

August polymer-grade propylene (PGP) contracts are heading toward a one-cent decrease and PP resin prices probably will follow. The PlasticsExchange said, however, that it can also see justification for flat PP contracts, which would be recognizing a penny margin gain. At least one producer, Formosa, has come out with another proposed September increase of $0.02/lb for homopolymer PP and $0.04/lb for copolymer PP.

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