is part of the Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Weekly Resin Report: Another Price Increase for August PE Contracts on Table

TAGS: Materials
Image: Peshkov/Adobe Stock weekly resin report stock image
Tighter supply/demand conditions and upward market momentum will lend support to producers’ efforts to implement yet another $0.05/lb price increase for domestic August PE contracts, reports the PlasticsExchange.

Prices were mildly mixed in the resin market at the beginning of August, and while completed volumes did not quite reach the heights of the end of July, it was a very nice start, reports the PlasticsExchange in its Market Update.

Asking prices for fresh offers jumped to begin the month, which pushed some processors to the sidelines. The rise in both polyethylene (PE) and polypropylene (PP) export prices also gave pause to international buyers, as Asian prices have eased. Export pricing might have gotten a bit ahead of itself and has disengaged the easy arbitrage for incremental resin that had been present for months. Still, producers have had few surplus pounds to sell to exporters anyway, and sometimes the market just needs to breathe a bit.

Tighter supply/demand conditions and upward market momentum will lend support to producers’ efforts to implement yet another $0.05/lb price increase for domestic August PE contracts. With nine cents already in the bank from June and July, however, another increase could be a tall order, but still possible, writes the PlasticsExchange.

Spot PE trading was timid the first week of August. Volumes were below average at the PlasticsExchange trading desk, as participants mulled over higher asking prices, driving down demand. The first week of a contested price increase usually brings light offers, and this was no different, as availability for fresh railcars was crimped. Resellers were happy to provide liquidity and sell off some inventory to satisfy truckload needs, though asking prices had also jumped considering the new nickel increase and higher replacement costs. At first look, buyers were not ready to deal at those elevated levels, and transactions completed somewhere in between, according to the PlasticsExchange. Spot prices ended the week flat across the board, save for low-density PE Injection, which was up a half cent. Export activity also took a step back as larger orders required lower prices than were offered. As previously mentioned, producers are seeking an additional $0.05/lb for August contracts; the supply side has expressed continued confidence in the increase, but based on the first week’s spot market interest, it is certainly not a done deal, said the PlasticsExchange. 

The spot PP market was very busy the first week of August, reports the Chicago-based resin clearinghouse. Demand was solid, prices fluctuated, and many trades were completed. High-flow material was generally sought, and the transactions were well distributed between homo- and co-polymer PP, prime & wide spec, and resellers and processors. Sourcing was not simple, as restrained production and thinning upstream inventories created challenges. Initial asking prices were often high, but firm bids were strongly considered and deals came together. After spot PP prices rallied $0.05/lb the previous two weeks, PP prices slipped $0.02/lb by mid-week before recovering to settle Friday down just a penny. Spot volatility was largely attributed to the fluctuation in upstream PGP prices affecting resin market sentiment and speculation on the magnitude of the upcoming cost-push August price increase. The PlasticsExchange said that it remains “now cautiously bullish” about the market. Supply/demand dynamic is skewed tight and it is keeping a “close eye on monomer prices.” A contract price increase is anticipated this month, and some producers are seeking to enhance margins by $0.03/lb.

Hide comments
account-default-image

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish