It was a banner week on the spot resin markets, reports the PlasticsExchange (Chicago). Completed volumes were among the most in recent years and prices continued to rise. There was a smattering of prime and off-grade railcars, which had been scarce most of the month, but overall market liquidity is still relatively low, though improving. With higher prices still on the horizon, buyers remain aggressive, seeking to snap up any well-priced material that still remains. Resellers with uncommitted inventories are cautious not to sell too much too soon. 

Most polyethylene (PE) contracts are rolling steady in January, while average polypropylene (PP) contracts jumped $0.10/lb, matching the increase in contract monomer costs. There are significant price increases for both resin groups on the table for February, and the PlasticsExchange is confident in their implementation. The export markets have cooled a bit, affected by rising U.S. prices, the Chinese New Year and general uncertainty surrounding the new U.S. administration and its potential impact on international trade. 

PE trading was very good the week of Jan. 23, as spot levels continued to rise, with gains of $0.005 to 0.01/lb widely seen. Processors were active buyers, procuring extra material ahead of the $0.05/lb price increase slated for February. Houston traders’ inventories are thinning out and some national resellers/distributors appear to be holding back their unsold material for higher February sales. LDPE and LLDPE film grades remain in high demand against limited supply. 

Spot PE has eliminated its discount to contracts and has begun to price in a small part of the upcoming price increase, which is viewed as supportive, since February has yet to begin. In addition to the January nickel, at least one major PE producer has nominated another $0.06/lb increase for March contracts. The PE market is gaining some momentum and there appears to be more upside ahead in the short to mid-term. 

PP trading was extremely active: A very high volume of resin transacted this past week and prices continued to rise. After three quarters of oversupply and pressured prices, some buyers were incredulous with regard to a sharp upward market reversal. However, several months of reduced production and heavy exports have depleted upstream surplus supplies, which turned the market from bear to bull even before PGP monomer costs began to soar. 

Spot prime PP prices have now rallied about $0.11/lb and off-grade even more. Buyers’ attitudes are quickly changing as many appear short of material, reports the PlasticsExchange. The days of PP in the $0.40/lb range and special deals that began with a 3 were gone when the calendar changed from 2016. Prices in the $0.50/lb window are now the norm. Analysts caution that we will soon hear prices that begin with a 6. January PGP rose a dime, and based on current spot levels, the PlasticsExchange expects February PGP and PP contracts also to increase significantly, perhaps another $0.08/lb.