Spot resin trading improved substantially, such that the PlasticsExchange trading desk reported its best week so far this year. Completed volumes were above the 2023 average and activity was even pretty good by historical benchmarks, said the resin clearinghouse in its Market Update for the week of May 15.
Although some materials remained a challenge to source, spot availability was ample and deals were easier to conclude than in recent weeks. Demand improved, suppliers were more liberal with their pricing, and railcar transactions exceeded truckloads. Prices for both polyethylene (PE) and polypropylene (PP) continued to slide, and a penny peeled off many commodity grades. Export interest was solid: The best sales went to Mexico, while price expectations in the rest of the world have dropped faster than Houston levels, complicating incremental sales.
PP contracts to follow PGP costs south
Implementation of May price increases seems remote. Producers would be happy to hold PE contracts flat, if possible, and PP contracts will follow polymer-grade propylene (PGP) costs lower and finalize with a large single-digit loss, said the PlasticsExchange. The PE market was more active, as upstream inventories have swelled, encouraging spot railcar discounting. Buyers were able to take advantage of wide-spec deals and prime railcars available for the asking. The heavier flow was supported by American Chemistry Council (ACC) data for April released last week, which showed a second consecutive large monthly build in domestic stockpiles alongside a drop in sales and exports.
CP Chem has now lifted its force majeure on PE, just a week after Ineos did the same on high-density (HD) PE at its La Porte facility. There are still two force majeure declarations in place — Nova and Formosa — but these are also expected to be cleared soon. However, Shell’s PE facility in the northeast has been offline with no clear re-start date known.
Most PE grades lose a penny
Most PE grades were down a penny, with the exception of linear-low-density (LLD) PE Butene, which managed flat from the previous week. LLDPE was by far the more preferred resin, with transactions spread across Film and Injection grades. HDPE Blow Mold also saw good turnover, while low-density PE interest was comparably scant. It is highly unlikely that the current nickel price increase will take hold in May; at best, contracts should remain up $0.06/lb for 2023, with some erosion possible as processors are clamoring for a recall of the contentious $0.03/lb, according to the PlasticsExchange.
Discounted PP railcars roll in
Spot PP trading was robust, as processors that had been on the sidelines waiting for special purchasing opportunities were taken with the railcar discounts afforded last week. Prices for prime homo-polymer (Ho) PP grades sank another cent, while co-polymer (Co) PP, which is somewhat scarce, held firm. With the drop in HoPP, the discount to CoPP grew for the first time since late September 2022. A good volume of material changed hands in both railcar and truckload quantities. Transactions were well distributed between HoPP and CoPP, though more co-polymer would have sold if more competitive offers were made available, said the PlasticsExchange. Resellers have thinned their inventories and some CoPP grades are considered tight, including 20+ melt 2 izod and No Break resins. Consequently, buyers continued to pay a premium for packaged material to tide them over until new railcars arrive.
May PP contracts should settle down $0.07 to 0.08/lb along with PGP contracts, wiping away another chunk of the first-quarter gains. There is still much uncertainty about the economy and markets, but it felt like there was a hint of enthusiasm in the air as demand picked up and buyers became bolder in their procurement efforts, noted the PlasticsExchange.
Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website. For a comprehensive review of resin pricing and activity in the first quarter of 2023, read this analysis by Zachary Moore of business intelligence firm ICIS.