Spot resin trading was fairly active last week, but once again, more processors were window shopping and checking price levels than placing purchase orders, reports the PlasticsExchange in its Market Update. An even more negative tone emerged midweek among sellers, as another wave of spot and export decreases washed ashore, pointing to lower domestic contract prices again in December. This came alongside a downward global economic trend, as the continued spread of the Omicron variant stoked consumer demand concerns, which also lent itself to a dismal performance in the energy, monomer, and financial markets.

During the first week of December, polyethylene (PE) prices were flat to down a nickel depending on grade, while polypropylene (PP) prices dropped as much as $0.07/lb, reflecting better availability and competitive offers. International resin traders showed some interest; despite reduced asking prices, however, US material still was not overly competitive in high volumes outside of North and South America.

PE contracts lose another nickel

November PE contracts fell by a nickel for the second straight month, and many believe a third $0.05/lb decrease is forthcoming for December. With PGP monomer costs cascading lower and plentiful supply available, it seems that PP producers are giving up a nickel of their margin gained earlier this year in addition to the $0.09/lb drop in November monomer contracts. The overwhelming sentiment is that prices have further room to decline, at least through the end of the year, according to the PlasticsExchange. After enduring a year of highly elevated prices since the 2020 hurricanes kicked off the massive resin rally, processors are finally enjoying significant price relief in the fourth quarter. 

PE activity picked up a tad, but buying and completed volumes remained fairly weak. High-density (HD) PE Injection and Blow Mold grades lost a nickel and, hence, were the biggest movers in terms of pounds, followed by Film grades of low-density (LD) and linear-low-density (LLD) PE, all of which reflect more widespread material availability. Lower volume LDPE and LLDPE Injection kept the strongest premiums, as availability has only gradually improved. High-flow LDPE Injection is still among the hardest resins to source, along with LLDPE Hexene for film, which is still very tight, as are most EVA grades. Moderate tightness for Film and Pipe grades has begun to ease, as one producer has brought one of its units back online in Texas.

The PlasticsExchange reminds buyers that limited uncommitted quantities of material on hand from resellers are keeping prompt premiums in place, but improved PE railcar availability has most grades available with a three-week notice. Sharply discounted railcar offers are available for those ready to commit. PE contracts have lopped off a dime in two months, and there could be another nickel to go in December. Even with the quick dime decline, PE contracts are still up a net $0.33/lb in 2021.

Prime PP prices shed $0.07/lb

A sharp drop in PGP may be an indication that PP producers could be slowing down production in an attempt to hold on to margins, according to the PlasticsExchange. Prime PP prices chunked off a hefty $0.07/lb this past week, and there were even more deeply discounted off-grade railcars. PP buyers remained patient, as they work down inventories and await further discounted prices ahead. Forecasted contract orders could fall short of expectations, backing up additional pounds upstream.

While the start of the week was slow, the back half of the week saw more offers and a solid number of deals, highlighted by low-melt co-polymer PP and high-flow Random Clarified resins, a stark sign of looser availability as these grades are typically pretty tight. Despite the overall weakness in homo- and co-polymer PP, prime pricing generally remained at $1/lb and slightly higher. Some inventory strain is expected this month, with one PP supplier on a planned maintenance turnaround at its Texas facility. Like PE, PP prices likely have further room to erode; however, a bottom or at least bounce may be approaching, as increased demand from a lack of imports could start to emerge.

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