Last week’s flow of offers was sporadic, with asking prices for most commodity resins continuing to edge higher, reports the PlasticsExchange (Chicago) in its Market Update. Prime polypropylene (PP) prices added a half-cent, and polyethylene (PE) levels either held steady or were mildly mixed by grade.
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With the January $0.04/lb PE increase intact, most contracts are heading toward a flat February, though a very tight supply of low-density PE resins could confirm another $0.02/lb boost, supported by both strong spot pricing and a major producer nomination. Some February PP contracts could follow PGP contracts down a cent, while others hold flat given tightly supplied conditions leading into the concerted effort to expand margins by $0.03 to 0.04/lb come March. The export markets remained hot, though higher asking prices and limited supplies challenged some sizable opportunities last week.
Spot PE trading remained busy during President’s Day week, as availability improved for some, but not all, grades. Completed volumes at the PlasticsExchange trading desk were on the high side, as market participants continue to tap its spot sourcing platform to fill orders for immediate shipment. Some buyers had been holding off, trying to avoid higher prices, but came back to buy, and, indeed, paid up, as their on-hand inventories dwindled.
PE prices were mixed, ranging from down a half cent for high-density film, which continued to see dwindling demand because of single-use bag bans, to up a full penny for low-density (LD) film, which remained scarce. Although some fresh LD Clarity railcars did emerge, albeit at new higher prices, there were limitations as to what processors would pay for material, writes the PlasticsExchange in its weekly report. At least one producer issued a letter to increase LDPE by an additional $0.02/lb in February and all grades by $0.04/lb in March. Most PE contracts should roll flat in February. A major consultancy issued its own estimate as steady; based on past experience, however, that can be easily revised. Upward pricing momentum persists, but some caution that the spread of coronavirus could bring a significant economic headwind and damage demand.
PP trading ran slightly above average and might have been even stronger if domestic transactions had not been limited by tight availability and export orders had not been stymied by higher asking prices. Although offers were generally limited, largely as a result of planned maintenance and unexpected production issues, the PlasticsExchange said that it was able to locate good pockets of material to fill back-to-back deals and complete other transactions. There was an even mix between homo- and co-polymer PP transactions, while off-grade sales eclipsed Prime. Even though PGP monomer costs slid a cent in February, the spot PP resin market continued to firm up and added another half-cent this past week.
Resellers were good buyers: Some secured material for immediate shipment to their processor customers, while others simply padded their inventories in anticipation of PP prices heading higher. With coronavirus fears shaking markets, it remains to be seen how demand plays out and if supply remains tight enough to validate the three- to four-cent margin increase slated for March.
Read the full Market Update on the PlasticsExchange website.