Resin Price Report: Resin Demand Heats Up as Summer Starts

June — and, surprisingly, not March — came in like a lion this year, at least as far as spot resin trading is concerned. The first full week of June was the busiest week of the year so far at the PlasticsExchange, where completed volumes were more than double the average rate, the resin clearinghouse writes in its Market Update.

Initial asking prices for polyethylene (PE) and polypropylene (PP) railcars started the month higher, which did not scare away buyers who were eager to pull the trigger with orders. Strong domestic demand was seen from both processors and resellers, while heavy PE export went to Asia and Latin America, and high volumes of PP were sold to Mexico. Spot demand for truckloads was elevated, as well, with ongoing delays in railcar deliveries adding fuel to the fire. Heightened activity coincided with the unofficial start of summer, which is the peak season for many industries, such as construction, automotive, and packaging. It’s also the official onset of hurricane season.

Spot PE prices trend upward.

Prime spot PE prices at the PlasticsExchange were firm and consolidated toward the upper end. Prime PP prices picked up a half-cent alongside slowly escalating polymer-grade propylene (PGP) monomer costs.

The PE market saw heightened activity as June ushered in: Spot demand remained strong and numerous deals were completed across all commodity-grade resins. A flurry of orders came from processors seeking to cover their short- to mid-term needs early in the month, and there was also notable buying from resellers requiring truckloads to fill in for late railcars.

The major movers were almost evenly split between linear-low-density (LLD) PE for Film and Injection, and high-molecular-weight (HMW) PE for Film. High-density (HD) Blow Mold and low-density (LD) PE Film saw solid action, as well, according to the PlasticsExchange.

Producers continue to target exports for incremental sales, which has kept the domestic market snugly supplied while applying upward pressure on pricing. What used to be a rare occurrence has become a more common trend, as export sales again outstripped domestic shipments. Although international feedstock costs have softened along with Crude Oil the past month or two, surging freight rates and delays from Asia have more than offset the cost savings, while driving additional buyers to the United States for competitively priced PE with quicker shipping.

On the contract front, producers have rolled their three-cent price initiatives to June, having been unsuccessful in implementing higher prices in May.

Prime PP prices rise three cents in four weeks.

Domestic PP demand has been scorching hot, now that contract prices came off in April and May, and processors have been restocking.

Both homo- and copolymer PP added a half-cent, following a penny-and-a-half increase the previous week. Prime PP prices at the PlasticsExchange have risen by three cents over the past four weeks.

Although PP operating rates have experienced an uptick in the past month or so, PP exports have also increased, particularly to Mexico, keeping overall supplies snug. As PP production increases, monomer demand has followed, lifting PGP prices about 10% from their lows. The burgeoning upward trend, in turn, has encouraged additional PP resin purchases. Resellers have been covering short PP positions, soaking up good off-grade railcars as they become available, and have been consistently tapping the spot market for truckload supplies to fill in along the way, writes the PlasticsExchange.

The resin clearinghouse says it has been an aggressive buyer of PP for its market-making inventories, “but well-priced supplies have not been easy to acquire and demand has been so swift that it has been difficult to keep healthy volumes of material in stock. PP contracts dropped a dime in April and a deuce in May, and we have turned outright bullish on spot PP pricing, and see upside for contracts, too,” says the PlasticsExchange.

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

Celanese declares force majeure.

Global chemical and specialty materials company Celanese confirmed at the end of last week a declaration of force majeure for acetic acid and vinyl acetate monomer (VAM) in the Western Hemisphere. The company blamed the decision to declare a force majeure on disruptions in the supply of critical raw materials and operational issues related to its acetyl chain US gulf coast network.

The Dallas-based firm expects a negative 15 to 20% impact to its Q2 gulf coast production of acetic acid and VAM. “At this time, Celanese cannot provide any further details or timing of the full impact to customers or to its financial outlook,” the company said in the press release.