Spot resin trading was healthy last week: Prices were mostly steady—some were lower—and completed volumes were high, especially late in the week, according to the Market Update from the PlasticsExchange (Chicago). After soaring for some time, recently falling freight rates have been contributing to a better spot trade, helping to lower delivered prices to processors. Houston area prices should continue to weigh heavy, as another round of tariffs has been imposed, signaling that the U.S.-China trade war is far from over. $200 billion in Chinese products have been targeted by the United States, followed quickly by a retaliation of $60 billion.
|Image courtesy Cool Design/
A major consultancy, which ultimately lowered its August polyethylene (PE) assessment by $0.03/lb, has estimated a reversal for September, already regaining that decrease. Most PE producers have nominated an additional $0.03/lb increase for October, some claiming to implement their other $0.03/lb increase onto September contracts. If August and September cancel each other out, there once again is simply a $0.03/lb increase on the table.
Polypropylene (PP) contracts should just follow PGP contracts down $0.01/lb in September. At this point, we see little impetus for major PP movement ahead in October, but there is plenty of time for things to change, writes the PlasticsExchange in its report.
The spot PE market was very busy, as buyers and sellers continued to come together and complete a relatively high volume of transactions. In general, sellers kept the market well supplied with a good flow of fresh offers, while buyers stepped up, finding value in the lowest prices in more than a year. The three PE grades that were pressured, down $0.005 to 0.01/lb, were low-density (LD) PE film, high-density (HD) PE injection and HDPE blowmolding. Perhaps not a coincidence, these three grades generated the most completed deals to come across the PlasticsExchange trading desk this past week. The rest of the commodity PE resins were flat and somewhat quiet. Tariffs remain a major factor in the market, with no signs of resolution; HDPE and linear LDPE remain targeted resins, while LDPE is currently not included
In contract news, producers have nominated a fresh, mostly $0.03/lb price increase for October. In the meantime, spot levels remain well discounted to contracts, though large contract buyers also indicate receiving price support to current market levels.
Polypropylene trading was solid at the PlasticsExchange. Material availability improved, which included the typical flow of off grade, both packaged in Houston and domestic cars, as well as several good rounds of generic and downgraded prime offers. Demand was steady, prices held flat and co-polymer PP buying outstripped homo-polymer PP, which saw its fair share of orders, as well. Supply disruptions from a force majeure earlier this month has brought additional demand to the spot market. September PP contracts slipped a cent, and while resin contracts should continue to follow PGP, there is underlying support to the market. The supply/demand dynamic remains balanced to tight, with imported resin helping to close the gap.
Read the full Market Update on the PlasticsExchange website.