Resin Price Report: Slip Sliding into Summer

Spot resin trading slowed a tad the first full week of June, as spot commodity-grade resin prices trimmed yet another cent. Although resin offers were plentiful, buyers drove a hard bargain and tried to drag the market down further, reports the PlasticsExchange in its weekly Market Update. Sellers sometimes chased the lowball bids. In a few cases, though, by the time buyers came back to pay the original asking price, the railcars had already sold elsewhere. Some missed cars were easy to replace, while other reasonable deals remained frustratingly incomplete. 

Producers continued to ease their Houston export asking prices to stay competitive with aggressive international pricing from the Middle East and Asia. Still, abundant global supplies and lackluster demand challenged incremental sales.

Weekly PE trading pulls back

Polyethylene (PE) trading activity pulled back a bit from the relatively good turnover seen the previous few weeks. Volumes across the PlasticsExchange platform tallied around average for 2023, and most of the transactions were held to high-density (HD) PE for Blow Molding and Injection, linear-low-density (LLD) PE for Injection, and ethylene vinyl acetate (EVA) for Film. All of the PE grades peeled off another penny, as prices continued to slide.

Spot market activity has deviated significantly from contracts. Despite consistent spot market erosion, abundant supplies, and a major index estimating contracts to be down $0.03/lb late in the month, May contracts managed to roll flat and maintain their $0.06/lb gain for 2023.

Spot PE prices well below contracts

In the meantime, average spot PE prices, which vary by grade, had risen $0.057/lb this year before peaking in mid-March. Since then, they have fallen an average of $0.097/lb to current levels. As we approach the end of the first half of the year, average spot PE prices at the PlasticsExchange trading desk are now down a net $0.04/lb for 2023, which is a full $0.10/lb difference from contract price performance. Spot resin is well discounted to contracts right now, presenting excellent buying opportunities for savvy buyers, notes the resin clearinghouse. Procrastination may not be the best strategy at this point: Producers have a $0.03/lb increase on the table for June contracts and hurricane season has officially begun.

PP resins down a penny across the board

Polypropylene (PP) trading activity remained robust, as upstream resin supplies continued to loosen with producers seeking to sell off more of their bulging inventories. A relatively heavy flow of spot railcars, both prime and off grade, were available at well-discounted prices, while packaged inventories for some grades were fairly thinly supplied as resellers maintain reduced warehoused stocks. Though copolymer PP offerings were still scarcer than homopolymer PP and commanded a nice premium, PP resins were still down a penny across the board. In a letter to customers, Phillips 66 declared force majeure because of unforeseen equipment failure and required unplanned maintenance at its Bayway refinery in New Jersey. The company added that the force majeure restricted its ability to supply PP and that it has no timeframe on how long the event will last.

Preliminary data released by the American Chemistry Council (ACC) showed that PP processors took advantage of large back-to-back April/May price decreases, which totaled $0.19/lb, as they bumped up purchasing to replenish their coffers, yielding the best domestic sales since August 2022. Based on current spot polymer-grade propylene (PGP) levels, PP processors should expect another price decrease in June, albeit much more modest than the past two months.

PP exports in May were strong, too, and ran 40% above the trailing 12-month average. Despite slightly above-average production, the sales total resulted in a moderate inventory draw, but overall supplies remain plentiful.

The PlasticsExchange encourages readers to subscribe to the ACC for detailed supply/demand figures.

Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website. For a recap of resin pricing and activity in May 2023, read this analysis by Zachary Moore from business intelligence firm ICIS.