Resin Price Report: Rare Price Drop for PE Contracts

Spot resin activity maintained its rapid pace during the first full week of November. Polyethylene (PE) resumed its usual position as the more dominant material to change hands, while demand for spot  polypropylene (PP) pumped the brakes slightly, reports the PlasticsExchange in its Market Update.

Prime PE resin sheds a penny

Railcar volumes exceeded truckload business at the resin clearinghouse, and packaged truckloads still commanded a premium for those buyers in need of prompt material. There was a good flow of domestic off-grade PE and PP railcars, but not at the fast pace seen in previous weeks, and some of the super sharp discounts did not return. Some resellers sought to sell off a portion of their forecasted resin commitments early in the month, and this placed downward pressure on domestic pricing, causing Prime PE grades to shed a cent across the board. PP also lost a penny as polymer-grade propylene (PGP) prices continued to slide.

On a broader scale, as President-elect Trump prepares to re-enter the White House in less than two months, industries such as petrochemicals and resins anticipate greater clarity on the direction of energy, sustainability, and foreign trade policy, including tariffs. These are all key areas that will help shape the next four years.

Related:Resin Price Report: Prices Stabilize as Deals Flourish

The PE market had a strong first full week of November. Most of the business at the PlasticsExchange involved linear-low-density PE film, followed by low-density PE for film and injection. Supplies were relatively plentiful. Sellers were a bit less aggressive in moving material, but still willing to deal, so Prime PE prices peeled off another penny.

On the contract front, October PE was finally confirmed with a rare three-cent decrease. It was the first official decrease of the year. There is a three-cent increase on the table for November, but it would take something special to see it implemented this month, according to the PlasticsExchange.

PE export pricing seeks competitive footing

PE producers reduced their November export pricing to remain competitive on a global scale and it was met by overwhelming demand. Some notable exporters were awarded only limited volumes as several  producers quickly sold out their monthly offerings.  

There was still some pushback on pricing, citing the strengthening US dollar that affects costs for foreign buyers, but it did not matter as there were plenty of other players with orders in hand. After several months of significant upstream resin inventory builds, the surge in export business has been compounding the congestion at Houston-area warehouses. Key facilities are already jammed to capacity, which restricts packaging and causes delays, some of which are due to backups from the brief port strike. Outgoing ships are often full and some cargoes have been bumped to later sailings.

Ineos lifts force majeure

Spot PP trading slowed slightly from the previous week, though business remained solid. Processors replenished their stocks on the tail end of this price slide. There was also demand for packaged truckloads to offset slow railcars in transit and packaging delays. A steady stream of off-grade railcars made it to the market, providing the deepest discounts, particularly for homo-polymer PP and rougher transitional material.

Copolymer PP pricing had held up well, but some of the large premiums have been trimmed back. Copolymer PP carried the majority of the week’s completed volumes coinciding with Ineos lifting its force majeure after resuming normal operations and restoring inventories. The PlasticsExchange marked down its prime copolymer and homo-polymer PP prices another penny, as PGP monomer costs resumed their downward trend. That will lead to another moderate decrease this month for highly correlated PP contracts.

October PP contracts fell $0.06/lb bringing the two-month relief to $0.10/lb, more than wiping away the $0.09/lb increase implemented the previous three months.

Read the full Market Update on the PlasticsExchange website.