Weekly resin report: Bargain-priced polyethylene hits bottom, begins to rebound

Valentine’s Day week was kind to spot resin trading: Completed volumes were very high, prices were mixed, and once again transactions were significantly skewed in favor of polyethylene (PE) over polypropylene (PP), according to the Market Update published by the PlasticsExchange (Chicago).

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The flow of supply was a bit reduced, and the lowest priced PE offers that have been available in the market appear to be gone, at least for the moment. Spot domestic demand seemed to improve, as did export sales, with Chinese traders returning from their New Year’s break. The $0.03/lb PE price increase targeted for February seems unlikely; PP contracts will follow PGP contracts lower, with the PlasticsExchange expecting a $0.02 to 0.03/lb decrease.

PE trading continued to transact at a rapid pace—a consistent flow of opportunities was met with a high level of deal closures. At only mid-month, the PlasticsExchange reported that completed volumes have already surpassed those in January as well as February of last year. Low-density (LD) and linear-low-density (LLD) PE film grades were front and center, with a few injection grade trades sprinkled in for good measure. Traders were happy to sell inventory or complete fresh back-to-back transactions to keep resin flowing, as both domestic and export trade came alive in many different regions.

Prices were mixed: LLDPE and LDPE for film and HD injection were each up a penny, as the bottom of those markets seems to be cleaning up. High-molecular-weight and high-density blow molding were both flat; LLDPE and LD for injection, which had developed a large premium to film, lost a cent. There remains a $0.03/lb contract price increase nomination for both February and March, but implementation this month remains unlikely, according to the PlasticsExchange.

PP trading remained dour, and prices for homo- and co-polymer PP each slid a cent, as PGP monomer trickled still lower. Buyers continue to lower their bids, but spot material, at least that which is already placed/packaged, is scarce, and suppliers continue to demand elevated levels for prompt availability.

Railcar offers remain well-discounted to packaged material, so a bigger buy and more-patient delivery will yield a better deal. Spot PGP monomer finished the week at $0.345, a half-cent loss and a price level it hasn’t seen since late 2016. At that time, PP prices were about $0.05/lb below current levels; the divergence to monomer has been growing, which may bode well for margin expansion if producers should decide to dig in. Otherwise, the PlasticsExchange expects PP contracts to drop $0.02 to 0.03/lb in line with the anticipated decrease in February monomer contracts.

Read the full Market Update on the PlasticsExchange website.

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