The resin markets continued to quiet down last week, making the pace of activity the slowest of the month, reports the PlasticsExchange (Chicago) in its Market Update.
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| Image courtesy Cool Design/ freedigitalphotos.net. |
Spot polyethylene (PE) and polypropylene (PP) prices both managed to hold steady but with weak undertones, as commodity resin market sentiment could again be shifting. "We are feeling varying levels of bullishness cede to a more cautious neutral, amid falling energy/feedstock and trade war infused anxiety," said the PlasticsExchange. Reduced processor buying made an only slightly stronger flow of offers appear a tad oversupplied—it was subtle, but noticeable. May PE contracts were steady after increasing $0.03/lb in April; May PP contracts were up $0.045/lb and might be a little softer in June. Export demand was off and prices were softer.Â
After a mostly super busy May, spot PE trading enjoyed a holiday-shortened week and limped into the end of the month. Completed volumes were off for the second week in a row, taking a breather from the frenzied pace that persisted most of May. Some of the relaxed trade was attributed to participants away on an extended holiday break, but it was more likely a sign that buyers are taking some time to wait and see what direction the PE market will next take, according to the PlasticsExchange. Earlier in the month there was upward momentum fresh from the unexpected implementation of an April $0.03/lb contract increase. With escalating trade wars and weakening oil prices, there was ample reason to pause and observe.Â
PE volumes receded, according to the PlasticsExchange, and sentiment shifted more neutral from slightly bullish, but spot prices were able to hold flat this week and some grades such as low-density PE for film are still not easily sourced. May contracts have officially rolled flat and the $0.03/lb that was in play will again be sought in June. U.S. resin sales to Mexico could slow due to a new proposed immigration-related trade tariff, which has already affected the peso. This would impact yet another important resin-trading country to the growing list of countries where resin once flowed freely, but is currently impacted by political/trade wars. Again, it’s a stark reminder that many different factors can affect resin markets aside from just feedstock costs and supply chain dynamics.Â
PP trading activity was lackluster last week, as participants were somewhat hesitant to transact with May PGP monomer and PP resin increases still on the table oh-so-late in the month. Indeed, May contracts finally did settle up $0.045/lb, a tad shy of the $0.05/lb suggested by the PlasticsExchange, but still a significant increase given the level. Spot PP prices were flat, having already eased a cent from the cycle high seen mid-month. The flow of fresh railcar offers was a bit on the heavy side and resellers with uncommitted packaged inventories became more willing to deal on price to move material. When it comes to international PP trade, there has been nary a word to sell imported PP as the inbound arbitrage has been shut for months, and, instead, prime and offgrade sales to Mexico have been more prevalent.
Read the full Market Update on the PlasticsExchange website.
