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Resin Report: Events in Canada Add to Processors’ Supply-Chain Woes

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Protests blocking key roadways and bridges into and out of Canada are causing delivery delays, compounding other persistent supply-chain issues.

Buoyed by strong demand, a good volume of polyethylene (PE) and polypropylene (PP) changed hands the early part of last week, but the pace slowed as well-priced supplies began to dry up, reports the PlasticsExchange in its Market Update. Processors that stuck firmly to their bids, hoping to secure more material at levels seen the previous couple of weeks, watched from the sidelines as other buyers, encouraged by rising energy and feedstock costs, flocked to the market and snapped up the material.

Benchmark Prime prices at the Chicago-based resin clearinghouse were up a penny across all PE grades while PP rose by two cents. Spot PE offers for both domestic and export markets have been priced up $0.04/lb, reflecting current price increase efforts, though contract implementation remains uncertain. February PP contracts are pointing moderately higher based on rising PGP monomer costs and more balanced supply/demand dynamics.

Expect resin delivery delays

In the meantime, a number of exporters still have resin sitting in Houston warehouses that should already be on ships. Higher resin prices overseas, specifically for competitive supplies coming from the Middle East and Asia, support healthy exports from the United States. However, a lack of equipment, ships, and personnel have limited actual export shipments from Houston. Similar supply-chain frustrations, including high freight, delayed railcar shipments, and slow packaging at warehouses around the country, continue to send processors and resellers to the PlasticsExchange’s spot market for ready-to-ship truckloads. Resin producers were also looking to facilitate delivery of Canadian orders amid protests blocking key roadways and bridges into and out of Canada. Significant order-delivery delays should be expected until the supply-chain constraints are alleviated, writes the PlasticsExchange. Major logistics companies and resin producers have already increased prices on transportation and polymer products since the start of 2022 because of labor shortages, truck capacity, rising fuel prices, and packaging costs.

PE resin prices rise another $0.01/lb

PE trading moderated a bit compared with the heavy turnover of material seen in January and early February. However, the global and US PE floor price rose slightly the week of Feb. 7 amid upstream cost pressures.

PE prices at the PlasticsExchange were up another $0.01/lb across all commodity grades. Producers held domestic prime offers up $0.04/lb, as they push to enforce the current price increase. Railcar delays and backups at packaging facilities had resellers clearing out material available for prompt shipment. High-density PE Blow Mold, which had more than ample volume move a week earlier, saw action dwindle substantially. Low-density PE activity also was limited, with no surplus of inventory available for the wholesale trade. Linear-low-density PE Film trading was the main focus and, again, material seemed to sell as soon as it became available. This comes as tightness for Film grade with both slip and antiblock persists, leaving unfilled demand. Downtime at a major slip manufacturing facility in Memphis is expected to run through most of February, while the facility of a PE producer in Texas remains on planned turnaround.

Prime PP material hard to find

PP trading was more active compared with the PE market, as strong demand emerged, especially from the Northeast amid a force majeure in the region. There was a consistent flow of off-grade railcars, but prime material was hard to come by. With February PGP contracts on track to move into the low $0.60s/lb, some prime PP offers inched further above $1.00/lb, stretching the overall price spectrum. Completed PP volumes were above average with homo-polymer (Ho) PP more available than co-polymer (Co) PP. Deals were pretty evenly split between HoPP and CoPP, with Prime mid-melt HoPP leading the way, followed closely by widespec CoPP mid-melt. High-flow CoPP would have been the top mover of the week at the PlasticsExchange trading desk if more material had been available to sell. Sensing a February contract increase coming, processors continued to seek well-priced material in the spot market; based on higher feedstock costs, the increase could be a nickel or more.

Read the full Market Update, including news about PGP pricing and energy futures, on the PlasticsExchange website.

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