Weekly Resin Report: After Slow Start, Week Ends with Large Volumes of PE Changing Hands

Weekly Resin Report: After Slow Start, Week Ends with Large Volumes of PE Changing Hands

The highly resilient North American resin market continued on tightly supplied, but with a very cautious tone, reports the PlasticsExchange.

The spot resin markets were slow most of last week, as many participants retreated to their bunkers, watching the commodity and stock markets erode in epic fashion. There is no doubt that the severe restriction of non-essential travel, in an attempt to contain the spread of the novel coronavirus, as well as the effective shutdown of public events will have a tremendous impact on the economy and, ultimately, plastics demand, reports the PlasticsExchange in its Market Update.

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As if the shock from COVID-19 was not enough, the U.S. markets awoke Monday morning to news that Saudi Arabia and Russia kicked off an oil-market war. That sent crude oil prices plummeting as much as 30% to $28/bbl, and drove the stock market into a tailspin. The initial impulse was OMG, resin prices could get crushed, better get out of the way. Indeed, the PlasticsExchange said it had very few buyer inquiries early in the week.

Notwithstanding the terrible situation for those directly involved with the virus, many businesses will continue to operate. There are products that need to be made, and for that, plenty of resin pellets will be processed. That said, “by Wednesday our phones began to ring with orders, and while we all recognized the negative change to sentiment, nobody was truly expecting that North American resin prices would quickly vacuum a dime lower,” writes the PlasticsExchange. The resin clearinghouse, based in Chicago, said that it did not see any panic selling and that there were no cargo ships full of resin offered to just anyone who would venture a paltry bid. In fact, the highly resilient North American resin market continued on tightly supplied, but with a very cautious tone.

Spot polyethylene (PE) trading began the week very slowly as fears from coronavirus permeated the marketplace; however, the week finished in stark contrast, with large volumes changing hands. Some buyers sought to add to on-hand inventories as a buffer against the unknown, though a conservative tone was maintained. Low-density PE and linear-low-density PE for both film and injection were the most active PE grades, with prices holding steady. High-density PE was weaker — blow mold and injection grades each lost a penny. There is currently a $0.04/lb increase on the table for March PE contracts, but given all of the unrest in the world, prompt implementation seems unlikely, according to the PlasticsExchange. International resin buyers have taken this opportunity to present aggressive, lowball bids, many of which are not able to be filled at this time.

Spot polypropylene (PP) trading was challenged this past week, and prices slid a cent. Order flow at the PlasticsExchange was evenly split between resellers and processors, and completed transactions were a tad above average. There was strong demand for immediate truckloads, while just a handful of railcars changed hands. Overall availability remained tight: Homo-polymer PP truckloads were available but not easy; competitively priced co-polymer PP truckloads were outright difficult to source, and off-grade railcars were more available than prime. The coronavirus/oil-market declines claimed their first spot PP penny decrease of this cycle. It’s hard to say when markets will stabilize from this uncertainty, added the PlasticsExchange, but in the meantime its trading desk is available to fill any short term needs as we all proceed with care and caution.

Read the full Market Update on the PlasticsExchange website.

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