With the exception of a short lull on Wednesday, the spot resin markets were hyper active last week. Completed volumes were high, contributing to a strong month and one of the best quarters, only barely eclipsed by the extraordinary hurricane market of late 2017, reports the PlasticsExchange (Chicago) in its Market Update.
 |
| Image courtesy Cool Design/ freedigitalphotos.net. |
While the flow of offers was fairly consistent, product moved swiftly and great deals did not last too long. Certain commodity grades have become much harder to find—they are still available for immediate shipment, just not in larger volumes. Export sales remained strong. Spot prices were flat for the week and, as predicted by the PlasticsExchange, March contract prices were flat for polyethylene (PE) and slightly down for polypropylene (PP).
Spot PE trading was more consistent and active as both March and the first quarter came to a close. The PlasticsExchange reports that its completed volumes were high, making it one of the best weeks of 2019. By midweek, special month-end railcar offers had begun to dry up, while domestic demand continued through Friday, ending with a waft of sentiment that was no longer bearish, but still not quite bullish. Processors have been drawing down their inventories since November and they are now getting quite low; better buying conditions are expected to return in the months ahead.
Exports continued to flow at a rapid rate, and general transaction levels have increased $0.01 to 0.02/lb from their cycle low, though buyers pushed back on offers priced beyond this level. Trader inventories have thinned significantly, though all commodity PE resins remain accessible for immediate shipment in reduced volumes. Still, there has been no issue sourcing prime export material allowing a couple/few weeks for packaging, as warehouses are still super busy. Market participants generally recognize a rollover of contract prices from February to March; a renewed effort for a $0.03/lb increase will likely ensue in April.
PP trading was good but not great, as March came to a close. While the rate and volume of fresh offers were reduced, sharper discounts to clear out resin and enhance month-end sales did make an appearance. Processor bids were coveted and seller competition was at times fierce to secure orders.
March PGP and PP contracts have settled down $0.03/lb, bringing the first quarter decrease to $0.065/lb and the total increase since October to a whopping $0.245/lb. Demand has been off so far this year, as processors drew down from their on-hand resin inventories. With the March decrease intact, some processors are recognizing value at this level and have begun to slowly procure more material than their current usage. It will be interesting to see if this trend gains steam. The PlasticsExchange feels that PGP monomer and PP resin prices are fair at this level and advocates at least a neutral, if not slightly friendly, sentiment toward the market.
Read the full Market Update on the PlasticsExchange website.
