Resin Price Report: Whatever Happened to the Predicted Record-breaking Hurricane Season?

Prime polyethylene (PE) and polypropylene (PP) pricing held steady the final week of August heading into the three-day Labor Day weekend, with relatively few special end-of-month deals showing up, reports the PlasticsExchange in its Market Update. While most commodity PE and PP resins were readily available, a handful of grades remained scarce. Some were virtually non-existent in the secondary market.

PE and PP producers each secured a $0.05/lb increase for their July contracts and have been seeking additional gains for August, according to the PlasticsExchange. PE buyers are still digesting the July hike, so the current nickel for August will likely be pushed to September, where — Surprise! — another nickel has already been nominated.

Hurricane season peaks on Sept. 10

We are just a few days away from what historically is the peak of the Atlantic hurricane season. Experts forecasted that this year would be one for the record books, but some are beginning to wonder if they got it wrong, prompting the New York Times to ask in a headline: “The Hurricane Season Was Supposed to Be Busy. What Happened?” It’s equally valid, of course, to presume that the worst is yet to come. As National Weather Service meteorologist Dan Harnos told the Times, “The typical peak of the season is not until Sept. 10, while more hurricane activity historically occurs following the peak than prior to it.”

Related:Resin Price Report: Houston Storm a Prelude to Hyperactive Hurricane Season?

Third straight monthly increase for PP contracts

At the time of writing, several weather disturbances are developing in the Atlantic. If another severe storm were to impact the petrochemical producing gulf coast, the entire dime on the table for PE could come into play, predicts the PlasticsExchange.

August PP contracts followed polymer-grade propylene (PGP) contracts up $0.02/lb for the third straight cost-push increase, now totaling $0.09/lb. This is also up $0.07/lb for 2024 as a whole. September polymer-grade propylene (PGP) has been slightly discounted to August in the spot market, but there is plenty of time for things to change as September gets underway.

PE trading improved and reasserted its dominant position as the most-traded resin at the PlasticsExchange. A steady flow of PE railcars rolled in this past week, but in low volumes, and domestic buyers scooped up the well-priced opportunities while passing on anything deemed too pricey. Export business ended the month with better demand, especially for Mexico and the rest of Latin America, more so than Europe, while China buyers have turned shy. Pricing for all commodity grades held flat with a softer undertone for export.

Film grades were almost the more preferred resin of choice during the week, and low-density PE, which remained scantly supplied, was the main mover. Good volumes of linear-low-density PE for film changed hands as well, while high-density PE business was rather light. 

It may take a significant weather event for PE price hikes to take hold

PE producers who are not fully integrated have been facing rapidly rising feedstock costs, which should serve to limit surplus production. If production discipline follows the pattern of the past two months, which brought upstream PE inventories to the lowest levels of 2024, supply/demand dynamics will bring upward pricing pressure to the domestic market, according to the PlasticsExchange. Still, it might take another meaningful weather event to implement either of the two $0.05/lb price increases on the table for August and September. We need to keep an eye on the three weather systems currently in the Atlantic and, as the PlasticsExchange has previously advised, it would be wise to carry an extra inventory buffer during this year’s hurricane season.

Has PP cost-push rally peaked?

PP trading has been inconsistent as heightened activity earlier in the month gave way to slower month-end sales. Some buyers view this cost-push rally near its peak and have turned cautious with higher volume purchases as they work through on-hand inventories instead. Others that did not build up a nice buffer at cheaper levels during the previous couple of months continue to buy as needed. Prime PP pricing at the PlasticsExchange stayed flat this past week; copolymer remains very tightly supplied and is carrying a wide 8-cent spread over homo-polymer in the spot market.

Production and availability are set to improve in September with the return of Ineos and Invista production lines, though neither producer has officially lifted its force majeure declarations. August PP contracts were all but finalized at a 2-cent increase, commensurate with the 2-cent gain realized for August PGP monomer contracts. Dow and Enterprise have both struggled to maintain on-spec PGP from their propane dehydrogenation (PDH) units, and the limited monomer production has kept PGP costs elevated. Monomer costs might ease if the industry’s PDH units all run well; in the meantime, however, monomer is still short and vulnerable to additional disruptions.

Read the full Market Update on the PlasticsExchange website.