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December 14, 2023
4 Min Read
Kriengsak Tarasri/iStock via Getty Images
At a Glance
Multi-railcar discounts were too compelling for some buyers to pass up
PE export sales outstripped domestic business at the PlasticsExchange last week
PE producers will be lucky to keep official contract prices from eroding
The commodity resin markets had a very merry week as the calendar turned to December. Participants were eager to transact, knowing that business can quiet down significantly as the holidays approach, reports the PlasticsExchange in its Market Update.
A welcome contrast to the generally sluggish 2023 market, Q4 has been the best quarter of the year at the PlasticsExchange trading desk. Improved market activity the week of Dec. 4 included typical ongoing customer order flow and urgent last-minute truckload shipments. Multi-railcar deals were done, too, as discounted pricing was too compelling for some to pass up. Some buyers remained steadfast in keeping their buying to a minimum, hoping that special December deals will still be around in January. We’ll see. . . .
Prime PP prices tick up a penny
While there was plenty of window shopping from those only testing market levels, the PlasticsExchange said it also transacted large volume sales into Europe and Latin America. Its benchmark Prime polyethylene (PE) prices were down a half cent, but there were significantly sharper deals to be had for off-grade materials and railcar buyers. Prime polypropylene (PP) prices picked up a penny, driven by a quick jump in spot polymer-grade propylene (PGP) monomer costs after yet another production issue at the Enterprise PDH #2 unit in Mont Belvieu, TX, which could be down for another month.
Sellers open to all reasonable bids for PE
PE trading was strong last week, as buy orders flowed in against abundant commodity supplies. Sellers entertained all reasonable bids — lower prices were exchanged for larger volumes, but there was certainly a limit to the discounting. “It’s been years since we have seen such holiday railcar deals,” writes the PlasticsExchange in its Market Update, “and we expect them to be around for another week or two before producers have had their fill and pack it up for the balance of the year. So, contact our trading desk and grab them while you can,” recommends the resin clearinghouse.
Other great buying opportunities were available in the Houston market, as dealers sought to unload packaged material to avoid year-end inventory taxes. PE exports soared as prices continued to slide. In fact, PlasticsExchange reports that its export sales outstripped domestic business last week — a rare feat. High-density PE Blow Mold was the biggest mover, followed by linear-low-density PE Film grades for processors in other regions looking to secure US material. Spot PE prices currently are lower than when the year started.
PE contract prices rose $0.09/lb this year
Considering current pricing pressure, it is highly doubtful that the twice-tried $0.03/lb PE increase will find favor in December. Producers will be lucky to keep official contract prices from eroding — they are up a truly unbelievable $0.09/lb this year. If past years are any indication, December might be hell for producers but heaven for processors in terms of resin pricing. After all of the holiday cheer and New Year celebrations conclude, it will be a new market in January, and many will wish they took advantage of the short market anomaly with purchase orders, predicts the PlasticsExchange.
While PP trading was swift last week, completed PE volumes were even higher, as PGP monomer costs and selective scarcity surprised many buyers expecting abundant material and price relief in December. The spot PGP surge early in the week pushed away resellers, as visions of cheaper replacement costs in December dancing in their heads were dashed; they began to covet their dwindling inventories instead. Seasonal year-end reseller destocking was apparent and while some spot supplies were still readily available, other grades were noticeably tight. Consequently, buyers were willing to pay up to fill supply gaps and serve prompt needs.
Benchmark Prime PP prices bucked the recent short-term downward trend and picked up a penny last week. Copolymer PP, which has been relatively scarce in the spot market for some time, sold more than homo-polymer PP; the vast majority of completed transactions at the PlasticsExchange were for Prime and commodity grades. December PGP values had been below November contract levels, but much of the gap was recouped during the past couple of weeks. If monomer disruptions continue, resin contracts could possibly skate into the end of the year with minimal change, if any. Of course, there is still some time left before negotiations complete.
Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website.
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