Weekly resin report: Commodity prices continue to drop

Spot resin trading activity slackened last week, following a busy period the week of March 12, reports the PlasticsExchange (Chicago) in its Market Update. While inquiries flowed from buyers and sellers, transactions were more difficult to complete, and volumes slid to just below average levels.

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Although resin availability remained spotty for some grades, commodity prices continued to drop, with polyethylene (PE) losing about $0.02/lb on average and polypropylene (PP) falling a cent or so. Despite the $0.03/lb increase nomination, PE contracts probably will roll flat in March, while PP contracts will follow PGP contracts lower. Export demand from Latin America and Europe remained healthy, while interest from India and Asia faltered this past week amid softening price levels in those regions, according to the PlasticsExchange. 

PE offers began to flow a little heavier with buyers picking away as needed. Most of the transactions were concentrated in linear low-density and low-density PE film grades, with smaller volumes of high-density PE blowmolding and injection also changing hands. PE prices were pressured across the board. There was particular weakness and declines of as much as $0.04/lb in linear low-density and low-density PE injection grades, which have lost a chunk of their premiums as material has become more abundant. As the month heads into its final stretch, it seems unlikely that the $0.03/lb increase slated for March will be implemented. Producers will take another shot in April, but processors feel the top of the PE market might be in place. 

PP trading followed suit. Demand was soft, as buyers have developed expectations for ever-decreasing prices, writes the PlasticsExchange, adding the caveat that suppliers with very little inventory felt otherwise. March PP contracts will decrease $0.06/lb, in line with the same decline in PGP contracts, but producers are looking to widen the margin between PP prices and PGP monomer come April. Increases range between $0.03 and 0.05/lb, depending on the producer. It has been a while since a margin-enhancing increase has held, but fundamentals are currently leaning toward some level of success.

Read the full Market Update on the PlasticsExchange website.

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