Weekly resin report: Completed transactions fall below average

The spot resin markets were noticeably slower and prices were mildly mixed the week of June 12, according to the Market Update from the PlasticsExchange (Chicago). In general, there were fewer polyethylene (PE) inquiries, which were equally matched by sometimes sporadic supplier offers. The combined effect was to challenge spot trading, where completed transactions fell below average. Prime PE prices were mostly steady, with both domestic off grade and export resin softening. Polypropylene (PP) levels inched up another half-cent amid tightening supplies and firming monomer costs. Incremental PE and PP exports, even to Latin America, have been hampered by competitive offers from other regions and the psychological impact of crude oil on the low end of its price band. It is, however, prudent to note that the official hurricane season is now underway and geopolitical tensions remain elevated. 

PE trading lacked the bright luster of recent weeks. Market sentiment has turned a tad more negative and buyers seem to have shied away from excessive purchases, writes the PlasticsExchange. There was ample supply of most commodity grades, with the continued exception of HDPE for injection, which remains scarce. Railcar offerings for uncerted/liberally downgraded PE resin were shown at discounted levels, while offers for true Generic Prime resin were limited, perhaps held back as June contract negotiations have been heating up. 

Time continues to march swiftly, bringing the market ever closer to another round of fresh PE production from new and/or expanded facilities. PE buyers seem to be quite comfortable and are looking to gain additional contract price relief, building on the $0.03/lb decrease achieved in May; producers, of course, are looking to stop the slide and hold June contracts steady. 

PP trading was a bit better and buyers were willing to ante up a little for spot material amid slightly bullish conditions. The spot PP market has already added a couple cents and the PlasticsExchange sees the potential for additional small gains ahead. While most commodity PP homopolymer grades were readily available, good quality PP co-polymer supplies have thinned significantly, especially No Break resin and Random Clarified, where premiums have been expanding. 

PP contracts will mostly follow propylene monomer flat in June. While some spot strength has been observed, it does not appear enough to warrant an attempt at de-coupling the tight correlation to monomer. June contracts could have been $0.01/lb or so higher; instead, there is room for an uptick in July. Resellers with uncommitted resin on hand have been quietly raising prices and even adding to surplus positions, if sharp offers are presented.

Read the full Market Update on the PlasticsExchange website.