Resin Price Report: Soft Prices About to Get Softer

Spot resin trading stayed active into mid-month, with above-average completed volumes across the marketplace supported by strong export sales, reports the PlasticsExchange in its weekly Market Update.

While Prime polyethylene (PE) and polypropylene (PP) prices have been shedding their 2024 gains in recent weeks, they stayed flat the week of April 8 and remain higher for the year. Domestic buyers continued to take advantage of softer prices. A heavier flow of off-grade railcars rolled through, particularly PP, said the PlasticsExchange, while some resellers sent light volumes of forecasted Prime PE commitments into the market.

PE contracts were up $0.03/lb in January. Additional increases have been on the table ever since, but none have stuck. Hope springs eternal among producers, though, who are giving their current $0.03/lb nomination another shot in April.

PP contracts endured a dime of cost-push increases during the first quarter of the year. Now that the monomer rally has fully contracted back to late-November levels, producers are poised to give it all back, and then some, in April.

Strong PE demand.

The PE market remained active the week of April 8. Strong demand was met with better supplies, and deals were struck across all commodity PE grades. High-density PE for blow mold and low-density PE for film were the major movers during the week, although linear-low-density PE for film and rotomolding also had a strong showing. Robust export demand led to offshore sales surpassing domestic sales, a rare occurrence.

Prime PE spot levels held steady after falling a penny across the board the week before.

Producers generate record monthly amount of PE resin.

Preliminary supply/demand data for March released by the American Chemistry Council (ACC) showed that PE producers ran their reactors hard, generating a record amount of PE resin in a single month. Domestic sales ran almost 8% above the trailing 12-month average. While exports were a tad softer, they were still 7% above the trailing 12-month average and comprised more than 45% of total PE sales. When the dust settled, production outstripped sales and there was a modest upstream inventory build of less than 1%, entering April at the highest level since December.

PP price cut in the offing.

PP trading had a good showing with an even mix of business between homo- and copolymer PP resin. Prime PP pricing at the PlasticsExchange finally held flat after four consecutive weekly two-cent drops, which had peeled off $0.08/lb since peaking in early March. There was still a bearish undertone as the market awaits a significant price decrease for April, which should break into double digits, according to the PlasticsExchange.

After an initial purge of reseller inventory in late March and early April, spot PP supplies have been noticeably tight, and packaged ready-to-ship truckloads now carry a significant premium to fresh railcars. High-flow co-polymer PP remains outright difficult to find — both truckloads and railcars — but the PlasticsExchange reports seeing signs of supplies coming loose. Based on ACC data for March, there is plenty of material being held upstream. PP producers ran their reactors fairly hard in March — above 82% — making the most resin since August, and 6% above the trailing 12-month average.

 PP exports recede.

Domestic sales were fine at 1.4% below the 12-month average, while exports slowed significantly and were just 3.3% of total PP sales. Aside from Mexico, international buyers had little interest in US resin, as exports tallied the lowest since September 2022. In the end, overproduction had the most impact, as producers’ collective PP inventories grew by more than 160 million pounds, an 8.6% rise over February. For precise data, subscribe directly to the council's report on the ACC website.

Read the full Market Update on the PlasticsExchange website.

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