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Resin prices increase under supply-and-demand market forces

The spot resin market got off to a slow start the week of Oct. 19, but momentum picked up as the week wore on, reports the Plastics Exchange. By Friday, Oct. 23, good demand coupled with thinner supply had pushed most polyethylene (PE) and polypropylene (PP) grades up by $0.01/lb. The flow of offers was less than the previous four to five weeks, but most PE commodity grades are still available in both bulk railcars and packaged truckloads.

The spot resin market got off to a slow start the week of Oct. 19, but momentum picked up as the week wore on, reports the Plastics Exchange. By Friday, Oct. 23, good demand coupled with thinner supply had pushed most polyethylene (PE) and polypropylene (PP) grades up by $0.01/lb. The flow of offers was less than the previous four to five weeks, but most PE commodity grades are still available in both bulk railcars and packaged truckloads. PP remains in short supply, and it's hit or miss whether particular grades can be sourced at favorable prices, according to the Market Update from Plastics Exchange. Houston warehouses are backed up with material destined for export, which is creating logistics delays and making traders with timely shipping commitments nervous. 

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Image courtesy Cool Design/freedigitalphotos.net.
The spot ethylene market remained active last week, with a high volume of material changing hands and prices rising fractionally. Ethylene for October delivery most recently transacted at $0.23625/lb, the high of the week's $0.02/lb range. The market has recovered more than a nickel from the six-plus year low established earlier this month.

Spot PE trading was brisk, and a higher than normal volume of material changed hands on the Plastics Exchange's real-time marketplace for commodity-grade resins. The stream of railcar offers was lighter, and domestic prices for most grades of generic prime and off-grade firmed another penny. Despite calls for further decreases, producers successfully held October contracts steady and will seek a $0.05/lb increase for November.

Very little activity took place in the spot propylene market, with just a couple of trades early on and barely any other bids or offers after that, reports the Plastics Exchange.

PP trading activity was about average. More transactions were concluded for off grade rather than prime, which is indicative of spot availability. There continues to be variance among market participants as to the magnitude and timing of price increases, but $0.02 to 0.03/lb appears to be the norm in October. Domestic spot PP prices moved $0.01/lb higher as buyers, coming to grips with higher contract levels, were willing to pay up for material. Plastics Exchange analysts expect the supply-demand imbalance to continue to drive further margin expansion at the producer level into November and perhaps beyond.

Read the full Market Update on the PlasticsExchange website.

TAGS: Materials
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